What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2010-03-22 compared with 2009-03-10 · 1276 added, 1350 removed, 425 unchanged (86% of the section changed)

1 unchanged sentence

UTEK CORPORATION

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND

Report of Independent Registered Public Accounting Firm

1 unchanged sentence

Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting

Consolidated Statements of Assets and Liabilities as of December 31, 2008 and 2007

Consolidated Statements of Operations for the years ended December 31, 2008, 2007 and 2006

Consolidated Statements of Cash Flows for the years ended December 31, 2008, 2007 and 2006

Consolidated Statements of Changes in Net Assets for the years ended December 31, 2008, 2007 and

Consolidated Schedules of Investments as of December 31, 2008 and 2007

Consolidated Balance Sheet as of December

31, 2009 and Consolidated Statement of Assets and Liabilities as of December 31, 2008

Consolidated Statements of Operations and Comprehensive Income (Loss) for the three months ended December 31,

2009, the nine months ended September 30, 2009, and the years ended December 31, 2008 and 2007

Consolidated Statements of Stockholders Equity (Deficit) and Comprehensive Income (Loss) for the years

ended December 31, 2009, 2008 and 2007

Consolidated Statements of Cash Flows for the three months ended December

31, 2009, the nine months ended September 30, 2009, and the years ended December 31, 2008 and 2007

Consolidated Statements of Changes in Net Assets for the nine months ended September

30, 2009 and the years ended December 31, 2008 and 2007

Consolidated Schedule of Investments for the year ended December 31, 2008

Notes to Consolidated Financial Statements

1 unchanged sentence

Board of Directors

UTEK Corporation and Subsidiaries

Corporation and Subsidiaries

Tampa, Florida

We have audited the accompanying

consolidated statements of assets and liabilities of UTEK Corporation and subsidiaries (the Company) including the schedules of investments as of December 31, 2008 and 2007 and the related consolidated statements of operations, cash

flows and changes in net assets for the three years ended December 31, 2008.

These consolidated financial statements and consolidated schedules of investments are the responsibility of the Companys management.

Our responsibility is to

express an opinion on these consolidated financial statements and schedules of investments based on our audits.

We conducted our audits in

accordance with the standards of the Public Company Accounting Oversight Board (United States).

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of

material misstatement.

An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements.

An audit also includes assessing the accounting principles used and significant estimates

made by management, as well as evaluating the overall consolidated financial statement presentation.

We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements and schedules of investments referred to above present fairly, in all material respects, the

financial position of the Company as of December 31, 2008 and 2007 and the results of its operations, cash flows and changes in net assets for the three years ended December 31, 2008 in conformity with accounting principles generally

accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting

Oversight Board (United States), the effectiveness of the Companys internal control over financial reporting as of December 31, 2008, based on criteria established in Internal ControlIntegrated Framework issued by the

Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 27, 2009 expressed an unqualified opinion thereon.

We have audited the accompanying consolidated balance sheet of UTEK Corporation and subsidiaries (the Company) as of December 31, 2009 and the related consolidated statements of

operations and comprehensive income (loss), and cash flows for the three months ended December 31, 2009 and the nine months ended September 30, 2009, and the statement of changes in net assets for the nine months ended September 30,

We have audited the accompanying consolidated statement of stockholders equity and comprehensive income (loss) for the year ended December 31, 2009.

We have also audited the accompanying consolidated statement of assets and

liabilities of the Company including the schedule of investments as of December 31, 2008 and the related consolidated statements of operations, cash flows and changes in net assets for the two years ended December 31, 2008 and 2007.

consolidated financial statements are the responsibility of the Companys management.

Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).

Those standards

require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement.

An audit includes examining, on a test basis, evidence supporting the amounts and

disclosures in the consolidated financial statements.

An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation.

believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements and

schedule of investments referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2009 and 2008 and the results of its operations and cash flows for the three month period ended

December 31, 2009, the nine month period ended September 30, 2009, and the two years ended December 31, 2008 and 2007 in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Companys

internal control over financial reporting as of December 31, 2009, based on criteria established in Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated

March 22, 2010 expressed an unqualified opinion thereon.

Effective October 1, 2009, the Company filed a

notification with the Securities and Exchange Commission withdrawing its election to be regulated as a business development company pursuant to the Investment Company Act of 1940, as more fully discussed in Note 1 to the consolidated financial

/s/ P ENDER N EWKIRK &

2 unchanged sentences

Tampa, Florida

February 27, 2009

REPORT OF MANAGEMENT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

March 22, 2010

REPORT OF MANAGEMENT ON INTERNAL CONTROL OVER FINANCIAL

UTEK Corporation

Management of

the Company is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in Rules 13a-15(f) under the Securities Exchange Act of 1934 (Exchange Act).

The Companys

internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the consolidated financial statements.

Because of its inherent limitations, internal

control over financial reporting may not prevent or detect misstatements and even when determined to be effective, can only provide reasonable assurance with respect to financial statement preparation and presentation.

Management assessed the effectiveness of the Companys internal control over financial reporting as of December 31, 2008.

In making this

assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), in Internal ControlIntegrated Framework.

Based on our assessment, management believes that the Company

maintained effective internal control over financial reporting as of December 31, 2008.

Our internal control over financial reporting

as of December 31, 2008 has been audited by Pender Newkirk & Company LLP, an independent registered public accounting firm, as stated in their report which is included herein.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON INTERNAL CONTROL

OVER FINANCIAL REPORTING

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in Rule 13a-15(f) under the Securities Exchange Act of

1934 (Exchange Act).

The Companys internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the consolidated financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements and even when determined to be effective, can only provide reasonable assurance with respect to financial statement preparation

and presentation.

Management assessed the effectiveness of the Companys internal control over financial reporting as of

December 31, 2009.

In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), in Internal ControlIntegrated Framework.

Based on our assessment,

management believes that the Company maintained effective internal control over financial reporting as of December 31, 2009.

Our internal control over financial reporting as of December 31, 2009 has been audited by Pender Newkirk & Company LLP, an independent registered public accounting firm, as stated in their report which is included herein.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON

INTERNAL CONTROL OVER FINANCIAL REPORTING

Board of Directors

Corporation and Subsidiaries

UTEK Corporation and Subsidiaries

Tampa, Florida

We have audited the internal control over financial reporting of UTEK Corporation and Subsidiaries (the Company) as of December 31, 2008, based on criteria established in Internal ControlIntegrated Framework

issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria).

The Companys management is responsible for maintaining effective internal control over financial reporting and for its assessment of the

effectiveness of internal control over financial reporting.

Our responsibility is to express an opinion on of the Companys internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).

Those standards require that we

plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial

reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the

circumstances.

We have audited the internal control over financial reporting of UTEK Corporation and Subsidiaries (the Company) as of

December 31, 2009, based on criteria established in Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria).

The Companys management is responsible for

maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting.

Our responsibility is to express an opinion on the Companys internal control over

financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company

Accounting Oversight Board (United States).

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk,

and performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

A companys internal control over financial

reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

companys internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the

assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of

the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the

companys assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control

over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree

of compliance with the policies or procedures may deteriorate.

In our opinion the Company maintained effective internal control over

financial reporting as of December 31, 2008, in all material respects, based on the COSO criteria.

We also have audited, in

accordance with the standards of the Public Company Accounting Oversight Board (United States), the statements of assets and liabilities of the Company, including the schedules of investments, as of December 31, 2008 and 2007, and the related

statements of operations, cash flows and changes in net assets for each of the three years in the period ended December 31, 2008 and our report dated February 27, 2009 expressed an unqualified opinion thereon.

A companys internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial

statements for external purposes in accordance with generally accepted accounting principles.

A companys internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that,

in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in

accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance

regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the companys assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of

any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion the Company maintained effective internal control over financial reporting as of December 31, 2009, in all material

respects, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting

Oversight Board (United States), the consolidated balance sheet of the Company as of December 31, 2009 and the related statements of operations and comprehensive income (loss), and cash flows for the three months ended December 31, 2009

and the nine months ended September 30, 2009, and the statement of changes in net assets for the nine months ended September 30, 2009.

We have audited the statement of stockholders equity and comprehensive income (loss) for the year

ended December 31, 2009.

In addition, we have audited the consolidated statement of assets and liabilities including the schedule of investments as of December 31, 2008 and the related statements of operations, cash flows and changes in

net assets for each of the two years ended December 31, 2008 and 2007 and our report dated March 22, 2010 expressed an unqualified opinion thereon.

/s/ P ENDER N EWKIRK &

2 unchanged sentences

Tampa, Florida

February 27, 2009

March 22, 2010

UTEK Corporation

Consolidated Statements of Assets and Liabilities

Consolidated Balance Sheet (2009)/ Consolidated Statement of Assets and Liabilities (2008)

Current assets:

Cash and cash equivalents

Accounts receivable, net

Non-affiliate investments (cost:

2008 - $36,994,463)

2007 - $31,588,337)

Affiliate investments (cost:

2008 - $38,559,629)

2007 - $43,779,616)

Controlled investments (cost:

2008 - $10,637,748;

2007 - $17,231,458)

Treasuries and certificates of deposit (cost:

Control investments (cost:

2008 - $10,637,748)

Certificates of deposit (cost:

2008 - $291,581)

Available-for-sale securities

Investments under cost method

Total investments

Cash and cash equivalents

Accounts receivable, net of allowance for bad debt

Prepaid expenses and other assets

Total current assets

Note receivable and accrued interest

Fixed assets, net

Intangible assets

Deferred tax asset

Intangible assets, net

Current liabilities:

Accounts payable

Accrued expenses

Notes payable and other debt

Accrued severance liability

Deferred revenue

Current maturities of long-term debt

Derivative liability

Total current liabilities

Long-term debt, less current maturities

Deferred tax liability

Total liabilities

Commitments and Contingencies

Composition of net assets:

STOCKHOLDERS EQUITY/ COMPOSITION OF NET ASSETS:

Preferred stock, $.01 par value, 1,000,000 shares authorized;

2 unchanged sentences

12,286,768 and 12,134,959 shares issued;

10,879,900 and 9,011,276 shares

outstanding at December 31, 2008 and 2007, respectively

11,797,140 and 10,879,900

shares outstanding at December 31, 2009 and 2008, respectively

Additional paid-in capital

Accumulated income:

Accumulated income (loss) under Investment Company Accounting:

Accumulated net operating income

2 unchanged sentences

Foreign currency translation adjustment

Total accumulated loss under Investment Company Accounting

Accumulated income (deficit) under Operating Company Accounting:

Accumulated deficit

Accumulated other comprehensive income (loss)

Total stockholders equity/ Net assets

Total liabilities and stockholders equity

Net asset value per share

1 unchanged sentence

UTEK Corporation

Consolidated Statements of Operations

Year ended December 31

Income from operations:

Consolidated Statements of Operations and Comprehensive Income (Loss)

Investment Company Accounting

Ended Dec 31,

Ended Sept 30,

Revenue / Income from operations:

Innovation consulting services

8 unchanged sentences

General and administrative

Amortization and depreciation

Goodwill impairment

Depreciation and amortization

Impairment loss

Other (income) and expense:

Other (income) expense

Interest expense, net

(Loss) income before income taxes

1 unchanged sentence

Net (loss) income from operations

Net realized and unrealized gains (losses):

Net realized gains (losses) on investments, net of income

tax expense (benefit)

Net change in unrealized depreciation of investments, net of deferred tax expense (benefit)

Net decrease in net assets from operations

Net decrease in net assets from operations per share:

Net realized and unrealized gains (losses) from investment company activity:

Net realized losses on investments, net of income tax benefit

Net change in unrealized appreciation (depreciation) of investments, net of deferred tax expense (benefit)

Net loss/ Net decrease in net assets from operations

Other comprehensive gain (loss):

Unrealized gain (loss) from available-for-sale securities

Cumulative translation adjustment

Comprehensive income (loss)

Net loss/ Net decrease in net assets from operations per share:

Basic and diluted

Weighted average shares:

Basic and diluted

Dividend declared or paid per share:

1 unchanged sentence

UTEK Corporation

Consolidated Statement of Stockholders Equity (Deficit) and Comprehensive Income (Loss)

Investment Company Accounting

Operating Company Accounting

Net Operating

Net Unrealized

Depreciation of

Comprehensive

Income (Loss)

Comprehensive

Income (Loss)

Shares Issued

Paid-In Capital

Balances at January 1, 2007

Employee stock options exercised

Stock-based compensation expense

Cumulative translation adjustment

Change in net assets

Balances at December 31, 2007

Employee stock options exercised

Stock-based compensation expense

Acquisition of Pharmalicensing, Ltd.

Acquisition of Strategos

Acquisition of Innovaro Ltd.

Acquisition of Social Technologies Group, Inc.

Earnout accruals for all companies

Cumulative translation adjustment

Change in net assets

Balances at December 31, 2008

Stock-based compensation expense

Common stock issued to acquire interest in a subsidiary of UTEK Real Estate Holdings, Inc.

Severance compensation paid out in escrowed shares

Earnout accruals and escrow adjustments

Cumulative translation adjustment

Change in net assets

Balances at September 30, 2009

Adoption of Operating Company Accounting on Oct 1, 2009

Stock-based compensation expense

Earnout accruals and escrow adjustments

Unrealized gain (loss) from available-for-sale securities

Cumulative translation adjustment

Other comprehensive gain (loss)

Comprehensive income (loss)

Net income (loss)

Balances at December 31, 2009

See accompanying notes

UTEK Corporation

Consolidated Statements of Cash Flows

Year Ended December 31

Investment Company Accounting

Ended Dec 31,

Ended Sept 30,

Operating Activities:

Net decrease in net assets from operations

Adjustments to reconcile net increase (decrease) in net assets from operations to net cash flows from operating activities:

Change in net unrealized depreciation of investments

Proceeds received on sale of equity investments

Net proceeds from sale (purchases) of short-term investments

Net repayment from (investment in) UTEK Real Estate Holdings, Inc.

Net loss/ Net decrease in net assets from operations

Adjustments to reconcile net loss/ net decrease in net assets from operations to net cash flows from operating

Change in net unrealized appreciation (depreciation) of investments from investment company activity

Loss on sale of investments from investment company activity

Proceeds from sale of equity investments from investment company activity

Net proceeds from sale (purchases) of short-term investments from investment company activity

Net repayment from (investment in) UTEK Real Estate

Depreciation and amortization

Amortization of debt discount from investor warrants

Goodwill and intangible asset impairment

(Gain) loss on sale of investments

Loss on sale of available-for-sale securities

Loss on disposal of fixed assets

Loss on derivative liability

Bad debt expense

Stock-based compensation

Severance compensation paid out in escrowed shares

Deferred income taxes

8 unchanged sentences

Investing Activities:

Purchases of fixed assets

Cash received (paid) in connection with acquisitions

Capital expenditures

Cash received (paid) in connection with consolidation/ acquisitions

Proceeds from sale of available-for-sale securities

Net cash flows from investing activities

Financing Activities:

Net proceeds from issuance of common stock

Proceeds from exercise of stock options / warrants

Net increase in line of credit

Proceeds from exercise of stock options

Proceeds from debt financing

Distributions to stockholders

1 unchanged sentence

Net cash flows from financing activities

Foreign currency translation adjustment

Effect of foreign exchange rates

Increase (decrease) in cash and cash equivalents

4 unchanged sentences

Consolidated Statements of Cash Flows (continued)

Year ended December 31

Supplemental Disclosures of Non-Cash Investing Activities

Ended Dec 31,

Supplemental Disclosures of Non-Cash Investing and Financing Activities

The Company issued 153,967 shares of common stock to purchase Pharmalicensing Limited.

In conjunction with the acquisition, liabilities were

assumed as follows:

In conjunction with the acquisition,

liabilities were assumed as follows:

Fair value of assets acquired

2 unchanged sentences

The Company issued 502,970 shares of common stock to purchase Carmi, Inc., a 100% owned subsidiary of Strategos, LLC.

In conjunction with the

acquisition, liabilities were assumed as follows:

conjunction with the acquisition, liabilities were assumed as follows:

Fair value of assets acquired

3 unchanged sentences

The Company issued 345,857 shares of common stock to purchase Innovaro Limited.

In conjunction with the acquisition, liabilities were assumed

In conjunction with the acquisition, liabilities

were assumed as follows:

Fair value of assets acquired

3 unchanged sentences

The Company issued 499,014 shares of common stock to purchase Social Technologies Group, Inc.

In conjunction with the acquisition, liabilities

were assumed as follows:

In conjunction with the

acquisition, liabilities were assumed as follows:

Fair value of assets acquired

1 unchanged sentence

Liabilities assumed

The Company issued 329,670 shares of common stock in connection with Strategos earnout contingency in 2008

The Company issued 6,131 shares of common stock in connection with Innovaros earnout contingency in 2008

The Company issued 82,919 shares of common stock to purchase 22 nd Street of Ybor City Group, Inc.

Investment securities received for unearned technology acquisition alliance services (net)

Dividend declared not paid

The Company issued 58,338, 85,950 and 335,801 shares of common stock in connection with certain acquisition earnout contingencies

Investment securities received for unearned global technology licensing services (net)

The Company received a note in connection with the sale of certain investments

The Company received 100,000 shares in Technology Capital Services, LLC in connection with the sale of certain

UTEK Corporation

Consolidated Statements of Cash Flows (continued)

Ended Dec 31,

The Company received 375,000 shares in Oxygen Biotherapeutics, Inc.

in connection with the redemption of 750,000

The Company issued stock in connection with an investment in UTEK Real Estate Holdings, Inc.

176,470 shares of UTEK common stock

240,964 shares of NeoStem, Inc.

The consolidation of UTEK Real Estate Holdings, Inc.

as of October 1, 2009 resulted in the addition of the following assets

and liabilities to the balance sheet:

Accounts receivable

Cost method investments

Other tangible assets

Accounts payable and accrued expenses

Derivative liability recorded upon issuance of investor warrants

Cash paid for taxes

Cash paid for interest

UTEK Corporation

Consolidated Statements of Changes in Net Assets

Year ended December 31

Changes in net assets from operations:

Net (loss) income from operations

Net realized gain (loss) on sale of investments, net of related income taxes

Change in net unrealized depreciation of investments, net of related deferred taxes

Net realized loss on sale of investments, net of related income taxes

Change in net unrealized appreciation (depreciation) of

investments, net of related deferred taxes

Net decrease in net assets from operations

2 unchanged sentences

Capital stock transactions:

Proceeds from issuance of common stock net of offering costs of $1,044,860 for the year ended December 31, 2006

Proceeds from the exercise of stock options

Issuance of stock options for compensation

Deferred tax related to stock-based compensation expense

Common stock issued in acquisition of 22 nd Street of Ybor City, Inc.

Severance compensation paid for in escrowed shares

Common stock issued in acquisition of Pharmalicensing Ltd.

2 unchanged sentences

Common stock issued in acquisition of Social Technologies Group, Inc.

Strategos earnout

Innovaro earnout

Escrow shares earnout

Investment in UTEK Real Estate Holdings, Inc

Net increase in net assets from stock transactions

Foreign currency translation adjustment

Net (decrease) increase in net assets

Net assets at beginning of year

Net assets at end of year

Net decrease in net assets

Net assets at beginning of period

Net assets at end of period

Information is presented for the nine months ended September 30 of the current year because the Company ceased operating as an investment company on

October 1, 2009.

As an operating company, measurement of certain items included in this table is not applicable or appropriate.

Therefore, certain items included in this table agree to financial statements included in the Companys

September 30, 2009 quarterly report on Form 10-Q as opposed to financial statements included in this annual report on Form 10-K.

See Note 1 for further discussion of the Companys change from an investment company to an operating

Distributions to shareholders as noted in the Consolidated Statement of Cash Flows for the year ended December 31, 2007 was accrued at December 31, 2006;

therefore, it is

not reflected as a distribution to shareholders for purposes of this schedule.

See accompanying notes

therefore, it is not reflected as a distribution to shareholders for purposes of this schedule.

accompanying notes

UTEK Corporation

8 unchanged sentences

Cyberlux Corporation

lighting solutions

LED lighting solutions

Series C Convertible Preferred Stock

33 unchanged sentences

Provider of renewable resources

Non-Affiliate Investments(1)

Tradequest International, Inc.

14 unchanged sentences

Energy saving technologies

Series B Convertible Preferred

Series C Convertible Preferred Stock

3 unchanged sentences

CytoDyn, Inc.

therapeutic agents

Novel therapeutic agents

Series A Convertible Preferred Stock

3 unchanged sentences

NeoStem, Inc.

banking services

Stem cell banking services

MachineTalker, Inc.

Intelligent wireless security networks

American Soil Technologies , Inc.

Fertilizer innovation

Avalon Oil and Gas, Inc.

2 unchanged sentences

Broadband telecommunication for moving vehicles

American Soil Technologies , Inc.

Fertilizer innovation

Cargo Connection Logistics Holdings, Inc.

4 unchanged sentences

Multi-media entertainment

Affiliate Investments(2)

Pathway One Plc (5)

and development licenses

Sales and development licenses

Tesla Vision Corporation (Manakoa Services Corp.) (8)

1 unchanged sentence

Series B Convertible Preferred Stock

Broadband wireless

Stealth MediaLabs, Inc.(9)

14 unchanged sentences

Total Investments in Control Investments

Treasuries and Certificates of Deposit(4)

Certificates of Deposit(4)

2 unchanged sentences

SunTrust Bank CD, maturity 9/12/09, interest rate @ 4.21%

Total Certificates of Deposit

Total Investments in U.S.

Treasuries and CDs

Total Investments in Certificates of Deposit

TOTAL INVESTMENTS

2 unchanged sentences

Notes to Schedule of Investments:

Except where otherwise noted, all of our investments listed above are in common stock of companies that are publicly quoted on the OTC Bulletin Board or listed on

the American Stock Exchange or other similar markets.

Except where otherwise noted, all of the Companys investments listed above are in common stock of companies that are publicly quoted on the OTC

Bulletin Board or listed on the NYSE Amex or other similar markets.

The above investments, with the exception of the U.S.

Treasuries and certificates of deposits, are non-income producing.

Equity investments that have not paid

dividends within the last twelve months are considered non-income producing.

Equity investments that have

not paid dividends within the last twelve months are considered non-income producing.

The value of all securities for which there is no readily available market value is determined in good faith by the Board of Directors.

In making its determination,

the Board of Directors has considered valuation appraisals provided by an independent valuation service provider.

In making its

determination, the Board of Directors has considered

valuation appraisals provided by an independent valuation service provider.

(See Note 4 to the Notes to the Consolidated Financial Statements.)

As of December 31, 2008, all of the securities that we own are subject to legal restrictions on resale.

As a result, our ability to sell or otherwise transfer

the securities we hold in our portfolio is limited.

As of December 31, 2008, all of the securities that the Company owns are subject to legal restrictions on resale.

As a result, the Companys

ability to sell or otherwise transfer the securities it holds in its portfolio is limited.

Non-affiliate investments are generally defined under the Investment Company Act of 1940 as companies in which the Company owns less than 5% of the voting securities.

Affiliate investments are generally defined under the Investment Company Act of 1940 as companies in which the Company owns at least 5% but not more than 25% of the voting

Control investments are generally defined under the Investment Company Act of 1940 as companies in which the Company

owns more than 25% of the voting securities or where the Company holds one or more seats on the companys Board of Directors.

Affiliate investments are generally defined under the Investment Company Act of 1940 as companies in which the Company owns at least 5% but not more than 25% of the

voting securities.

Control investments are generally defined under the Investment Company Act of 1940 as companies in which the Company owns more than 25% of the voting

securities or where the Company holds one or more seats on the companys Board of Directors.

We own 100% of UTEK Real Estate Holdings, Inc.

(UREHI), which holds four investments:

Rosbon LLC, ABM of

Tampa Bay, Inc., 22 nd Street of Ybor City, Inc.

Rosbon LLC, ABM of Tampa Bay, Inc., 22 nd Street of Ybor City, Inc.

and Ybor City Group, Inc.

UREHI holds 150 membership interests of the total membership interests

outstanding of Rosbon LLC and all of the outstanding shares of capital stock of ABM of Tampa Bay, Inc., 22 nd Street of Ybor City, Inc.

and Ybor City

The Company invests excess cash in a number of U.S.

Treasury Bills and certificates of deposit.

These short-term investments normally have three month to one year maturities and do

not qualify as cash or cash equivalents.

UREHI holds 150

of the total membership interests outstanding of Rosbon LLC and all of the outstanding shares of capital stock of ABM of Tampa Bay, Inc., 22 nd Street of Ybor City, Inc.

and Ybor City Group, Inc.

The Company invests excess cash in a number of certificates of deposit.

These short-term investments normally have three-month to one-year maturities and do not qualify

as cash or cash equivalents.

company or the companys principal place of business is outside the U.S.

Investment consists of warrants to purchase 1,500,000 shares of Oxygen Biotherapeutics, Inc., formerly Synthetic Blood International, Inc., common stock.

During the period ended December 31, 2007, the Company reclassified this investment from Control investments to Affiliate investments based on the criteria in notes

During the period ended December 31, 2008, the Company reclassified this investment from Control investments to Affiliate investments based on the criteria in

notes (2) and (3).

Advanced Medical Isotope Corporation and Tesla Vision Corporation are related through common management.

4 unchanged sentences

UTEK CORPORATION

Consolidated Schedule of Investments December 31, 2007

Non-Affiliate Investments(1)

Advanced Medical Isotope Corporation (12)

Development of isotopes to treat diseases

Preferred Stock

Broadcast International, Inc.

Telecommunications

Advanced Refractive Technologies, Inc.

Ophthalmic technologies

Series D Preferred Stock

Series C Preferred Stock

Series B Preferred Stock

(privately held)

Connective tissue technology

Synthetic Blood International, Inc.

Biotechnology products

Bacterin International, Inc.

(privately held)

Bioactive coatings for medical devices

Metamorphix Global, Inc.

(privately held) (13)

Design and manufacture of countertops

GammaCan International, Inc.

Anti-cancer immunotherapy

Ecosphere Technologies, Inc.

Defense, homeland security and global ship repair

Turbine Truck Engines, Inc.

Heavy-duty highway truck engines

Protocall Technologies, Inc.

On-demand software and entertainment

Magnitude Information Systems, Inc.

Computer ergonomics

TenthGate, Inc.

Healthcare related products and services

Starcom, Inc.

Communications services and products

Xethanol Corporation(13)

Bioethanol and derivative products

MM2 Group, Inc.

Financial consulting for nutraceuticals

Laserlock Technologies, Inc.

Security solutions for the gaming industry

SolarBrook Water and Power Corp.

(HydroFlo, Inc.)

Treatment and purification of water

Non-Affiliate Investments(1)

BP International, Inc.

Shade structures

In Veritas Medical Diagnostics, Inc.

Medical devices designs and testing

KKS Venture Management, Inc (Rheologics, Inc.)

Study of blood viscosity

Quest Minerals & Mining Corporation

Coal and mineral mining

New Life Scientific, Inc.

Pharmaceutical biotechnologies

aeroTelesis, Inc.

Satellite and wireless bandwidth utilization

Tradequest International, Inc.

Provider of voice over internet protocol

5G Wireless Communications, Inc.

Broadband wireless

Preservation Sciences, Inc.

Green technologies and development

AdAl Group, Inc.(5)

Aluminum extruded products manufacturer

Modern Technology Corporation

Technology development and acquisition company

EFT BioTech Holdings, Inc.

(HumWare Media Corp.)

Media advertising

UBA Technology, Inc .

Software development

Series A Convertible Preferred Stock

Trio Industries Group, Inc .

Protective powder coating

KP Renewables Plc (Kwikpower International Plc) (5)

Renewable energy

Convertible Debenture, due 5/10/07

Convertible Debenture, due 9/30/06

eLinear, Inc.(5)

Telecommunication security provider

Total Investments in Non-Affiliates

Affiliate Investments (2)

Material Technologies, Inc.(9)

Metal fatigue detection

Series E Convertible Preferred Stock

Cyberlux Corporation(9)

LED lighting solutions

Affiliate Investments(2)

Series C Preferred Stock

Emission & Power Solutions, Inc.

(Fuel FX International, Inc .) (privately held)

Reductional environmental emissions

Series B Preferred Stock

Avalon Oil and Gas, Inc.

Oil and gas producers

Manakoa Services Corporation(12) Compliance analysis and monitoring

Series B Preferred Stock

Pathway One Plc (5)(9)

Sales and development licenses

MachineTalker, Inc.

Intelligent wireless security networks

USTelematics, Inc.(14)

Broadband telecommunication for moving vehicles

NeoStem, Inc.(9)

Stem cell banking services

CytoDyn, Inc.

Development stage biotechnology company

Series A Preferred Stock

American Soil Technologies , Inc.

(9) Fertilizer innovation

vidShadow.com, Inc.

(DME Interactive Holdings, Inc.)

Multi-media entertainment

Cargo Connection Logistics Holdings, Inc.

World trade logistics

NetFabric Holdings, Inc.

Information technology services

GS Energy Corporation (INSEQ Corp.)

Waste minimization

Industrial Biotechnology Corporation(10)

Manufactures and markets flavors and fragrances

Stealth MediaLabs, Inc.(14)

Software products

Liberty Diversified Holdings, Inc.

Printing and packaging

Series B Preferred Stock

Total Investments in Affiliates

Control Investments(3)

UTEK Real Estate Holdings, Inc.

(privately held)

Real estate development

World Energy Solutions, Inc.(11)

Energy saving technologies

UTEK Real Estate Holdings, Inc.

(privately held)

(Demand note, interest rate @ 5%)

Klegg Electronics, Inc.

Manufacturer/distributor for retail electronic products

Total Investments in Control Investments

Treasuries and Certificates of Deposit(4)

United States Treasury Bill, maturity 2/07/08, interest rate @ 3.06%

Certificates of Deposit:

State Bank India CD, maturity 2/22/08, interest rate @ 5.15%

Indymac Bank FSB CD, maturity 2/25/08, interest rate @ 5.2%

First Natl Bank Arizona CD, maturity 2/27/08, interest rate @ 5.15%

Charter Bank West CD, maturity 2/29/08, interest rate @ 5.1%

Discover Bank CD, maturity 2/29/08, interest rate @ 5.15%

Lehman Coml Bank CD, maturity 2/29/08, interest rate @ 5.15%

Sterling Savings Bank CD, maturity 3/24/08, interest rate @ 5.1%

Capmark Bank CD, maturity 5/22/08, interest rate @ 5.15%

Firstcity Bank CD, maturity 5/22/08, interest rate @ 5.1%

Provident Bank CD, maturity 5/27/08, interest rate @ 5.1%

Total Certificates of Deposit

Total Investments in U.S.

Treasuries and CDs

TOTAL INVESTMENTS

Cash and other assets, less liabilities

Net assets at December 31, 2007

Notes to Schedule of Investments:

Except where otherwise noted, all of our investments listed above are in common stock of companies that are publicly quoted on the OTC Bulletin Board or listed on

the American Stock Exchange or other similar markets.

The above investments, with the exception of the U.S.

Treasuries and certificates of deposits and a demand note issued by UTEK Real Estate Holdings, Inc., are

non-income producing.

Equity investments that have not paid dividends within the last twelve months are considered non-income producing.

The value of all securities for which there is no readily available market value is determined in good faith by the Board of Directors.

In making its determination,

the Board of Directors has considered valuation appraisals provided by an independent valuation service provider.

(See Note 2 to the Notes to the Consolidated Financial Statements.)

As of December 31, 2007, all of the securities that we own are subject to legal restrictions on resale.

As a result, our ability to sell or otherwise transfer

the securities we hold in our portfolio is limited.

Non-affiliate investments are generally defined under the Investment Company Act of 1940 as companies in which the Company owns less than 5% of the voting securities.

Affiliate investments are generally defined under the Investment Company Act of 1940 as companies in which the Company owns at least 5% but not more than 25% of the voting

Control investments are generally defined under the Investment Company Act of 1940 as companies in which the Company

owns more than 25% of the voting securities or where the Company holds one or more seats on the companys Board of Directors.

We own 100% of UTEK Real Estate Holdings, Inc.

(UREHI), which holds four investments:

Rosbon LLC, ABM of

Tampa Bay, Inc., 22 nd Street of Ybor City, Inc.

and Ybor City Group, Inc.

UREHI holds 150 membership interests of the total membership interests

outstanding of Rosbon LLC and all of the outstanding shares of capital stock of ABM of Tampa Bay, Inc., 22 nd Street of Ybor City, Inc.

and Ybor City

The Company invests excess cash in a number of U.S.

Treasury Bills and certificates of deposit.

These short-term investments normally have three month to one year maturities and do

not qualify as cash or cash equivalents.

company or the companys principal place of business is outside the U.S.

Investment consists of a loan receivable with subsidiaries of UTEK Real Estate Holdings, Inc.

Investment consists of warrants to purchase 1,500,000 shares of Synthetic Blood International, Inc.

common stock.

During the period ended December 31, 2007, the Company reclassified this investment from Affiliate investments to Non-affiliate investments based on the criteria in notes

During the period ended December 31, 2007, the Company reclassified this investment from Non-affiliate investments to Affiliate investments based on the criteria in notes

During the period ended December 31, 2007, the Company reclassified this investment from Control investments to Affiliate investments based on the criteria in notes

During the period ended December 31, 2007, the Company reclassified this investment from Affiliate investments to Control investments based on the criteria in notes

Advanced Medical Isotope Corporation and Manakoa Services Company are related through common management.

Xethanol Corporation and Metamorphix Global are related through common management.

Stealth MediaLabs, Inc.

and USTelematics, Inc.

are related through common management.

See accompanying notes

UTEK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Nature of Business and Significant Accounting

provides services that help clients become stronger innovators, develop compelling strategies to drive and catalyze growth, rapidly source externally developed technologies, create value from their intellectual property and gain foresight into

marketplace and technology developments that affect their business.

These services are primarily provided throughout the United States and the United Kingdom.

The Company is 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

Innovation Consulting

Company provides strategic innovation consulting services to clients to help them become more efficient by finding new avenues to growth, fighting commoditization, improving return on investment, transforming the organization, and removing barriers

to innovation.

The process involves our clients working with a handful of seasoned and experienced professionals capable of unlocking an organizations capacity for strategy and innovation.

In addition, the Company provides services to clients that build the capacity for foresight, including monitoring trends, researching topics of interest,

forecasting alternative scenarios, developing technology roadmaps, creating growth platforms and embedding futures thinking within the organization.

The Company also offers innovative futures programs that provide clients with up-to-the-minute

knowledge, expert insight, high-level learning experiences, and opportunities to network with experts and peers.

Withdrawal of the Companys Election to be Treated as a Business Development Company under the Investment Company Act of 1940

Until September 30, 2009, the Company was a non-diversified, closed-end management investment company that had elected to be treated as

a business development company (BDC) under the Investment Company Act of 1940 (1940 Act).

On October 1, 2009, the Company filed a notification on Form N-54C with the Securities and Exchange Commission (SEC)

withdrawing its election to be regulated as a BDC under the 1940 Act.

As such, the Company began reporting as an operating company as of October 1, 2009.

Based on the Companys current business focus and the fact that the equity interests it holds have constituted a declining amount of its assets over the last couple of years, the Company determined

that it no longer met the requirements to be regulated as a BDC under the 1940 Act.

In this regard, the Companys current business focus is to provide consulting and technology transfer services to companies in exchange for cash as opposed to

equity interests.

Thus, because of the Companys current business focus of providing consulting and technology transfer services to companies in exchange for cash as opposed to equity interests, as well as the fact that the Company no longer

holds the requisite level of investment securities (as this term is defined in the 1940 Act) to permit it to be an investment company under the 1940 Act and, as a result, be regulated as a BDC, the Company is operating, and

intends to continue to operate, as an operating company rather than an investment company.

Accordingly, and after careful

consideration of the requirements applicable to BDCs under the 1940 Act, the cost of compliance with the provisions of the 1940 Act and a thorough assessment of the Companys current business model, the Companys Board of Directors

determined that the Company should withdraw its election to be regulated as a BDC under the 1940 Act.

Under its current

business model, the Company intends at all times to conduct its activities in such a way that it will not be deemed an investment company subject to regulation under the 1940 Act.

Thus, the Company will not hold itself out as being

engaged primarily in the business of investing, reinvesting or trading in securities.

In addition, the Company intends to conduct its business in a manner so that it will at no time own or propose to acquire investment securities having a value

exceeding 40% of the Companys total assets at any one time.

As a result of our de-election from BDC status, we make

reference to both Investment Company Accounting and Operating Company Accounting throughout these consolidated financial statements.

Investment Company Accounting, as we refer to it, is defined as accounting in accordance with U.S.

accepted accounting principles (US GAAP) for investment companies under the 1940 Act.

Operating Company Accounting, as we refer to it, is defined as accounting in accordance with US GAAP other than for investment companies under the

As an operating company, the Company is required to consolidate UTEK Real Estate Holdings, Inc.

subsidiaries:

Ybor City Group, Inc., 22nd Street of Ybor City, Inc., ABM of Tampa Bay, Inc., and Cortez 114, LLC (collectively UTEK Real Estate).

Under Investment Company Accounting, the fair value of UTEK Real Estate was included in the

Companys portfolio investments and the operating results of these companies were not consolidated with those of the Company.

The assets, liabilities and results of operations of UTEK Real Estate have been included in the Companys

consolidated financial statements from October 1, 2009.

As of October 1, 2009, none of the Companys other investments are greater than 20% of the outstanding equity interests of any individual company, and accordingly, consolidation

is not required for these investments.

The change in reporting did not have a material affect on the Companys net loss

from operations, net loss or related per share amounts for the three months ended December 31, 2009.

Conversion from Investment Company Presentation to Operating Company Presentation

ASC Topic 250, Accounting Changes and Error Corrections

UTEK was required to make the accounting change at the time that it no longer met the requirements of the 1940 Act and filed its Form N-54C with the SEC withdrawing its election to be treated as a BDC

under the 1940 Act.

The Company has applied the change as of October 1, 2009, which is the first date that it was no longer appropriate for the Company to use Investment Company Accounting.

The Companys change in financial statement presentation from fair value Investment Company Accounting to Operating Company Accounting

has been accounted for as the initial adoption of or modification of an accounting principle resulting from a change in events or transactions as contemplated by Financial Accounting Standards Board (FASB) Accounting Standards

Codification (ASC) 250-10-45-1.

The Companys change to Operating Company Accounting is clearly different in substance from that previously occurring under Investment Company Accounting.

This is not considered to be a change in

accounting principle.

In accordance with this view, the Company applied the adoption of accounting as an operating company prospectively beginning October 1, 2009.

ASC Topic 946, Investment Companies

As there was limited authoritative

guidance on accounting for the transition from a BDC to an operating company, the Company reviewed the guidance in ASC Topic 946 Financial ServicesInvestment Companies .

The Company relied on the guidance in Topic 946, a significant

portion of which has been delayed indefinitely.

The guidance that has been delayed is not US GAAP and is considered nonauthoritative.

The initial determination of whether UTEK was an investment company within the scope of Topic 946 was made upon formation of the Company.

Reconsideration of the provisions of Topic 946 by the

Companys Board of Directors during 2009 resulted in the determination that continuation as a BDC was inappropriate.

ASC 946-10-15-5 (delayed) dictates companies that no longer meet the conditions of an investment company should discontinue

application of Topic 946 and report the change in status prospectively by accounting for its investments in conformity with applicable US GAAP other than Investment Company Accounting, beginning as of the date of the change using fair value in

conformity with Investment Company Accounting at the date of the change as the carrying amount of investments at the date of the change.

In accordance with this guidance, the Company reported a change in status and began reporting as an operating

company as of October 1, 2009.

In addition, the fair value of the Companys investments as of September 30, 2009 became their cost basis under Operating Company Accounting beginning on October 1, 2009.

Presentation of Financial Statements

The Company made the following adjustments in order to present two years of financial statements together for which the years include two different methods of accounting.

Changes made to the accompanying

consolidated balance sheet / consolidated statement of assets and liabilities include the following:

The balance sheet was reformatted as of December 31, 2009 to a classified balance sheet presentation in accordance with Operating Company

The investment in UTEK Real Estate Holdings, Inc., which was included as a portfolio investment under Investment Company Accounting, was eliminated and

this companys balance sheet is consolidated with UTEK as of the date of change of October 1, 2009 pursuant to Operating Company Accounting.

Investments are now presented as certificates of deposit and either available-for-sale securities or investments under cost method in accordance with

ASC Topic 320 InvestmentsDebt and Equity Securities and ASC Topic 325 InvestmentsOther .

The stockholders equity presentation has separate classification for earnings accounts under Investment Company Accounting and Operating Company

Accumulated income (loss) under Investment Company Accounting includes earnings through September 30, 2009.

Accumulated income (deficit) under Operating Company Accounting includes earnings incurred subsequent to the date of change

of October 1, 2009.

Changes made to the accompanying consolidated statements of operations include the

Operations for the year ended December 31, 2009 were segregated into two columns in the consolidated statements of operations to properly report

results of operations in accordance with the accounting in effect during the respective periods.

The nine months ended September 30, 2009 are presented in investment company format and the three months ended December 31, 2009 are presented

in operating company format.

The statement of operations was reformatted for the three months ended December 31, 2009 to conform to an operating company presentation.

balances are not applicable to an investment company and are not included prior to the date of change of October 1, 2009.

These include other (income) expense and interest expense, net.

In addition, this statement includes the statement of

comprehensive income (loss) for the three months ended December 31, 2009.

UTEK Real Estates results of operations are consolidated with those of UTEK as of the date of change of October 1, 2009.

transactions, including intercompany borrowings and rent, are eliminated in consolidation for the three months ended December 31, 2009.

Through September 31, 2009, UTEK Real Estate is included as one of the Companys portfolio

companies and the fair value of this company is included in the Companys portfolio investments.

Certain balances reported under Investment Company Accounting are not applicable to an operating company and are not included subsequent to the date of

change of October 1, 2009.

These include investment income, net realized gains (losses) on investments and net change in unrealized appreciation (depreciation) of investments.

Under Operating Company Accounting, income and losses from these

sources are classified as follows:

Investment income is included in other (income) expense or interest expense, net, depending on its source.

Realized gains (losses) on investments are included in other (income) expense.

Unrealized appreciation (depreciation) on available-for-sale securities are reported in operating company equity as a component of accumulated other

comprehensive income (loss) in the consolidated balance sheet.

Other changes include the following:

The Consolidated Statements of Changes in Net Assets and the Schedule of Investments in and Advances to Affiliates, as well as Selected Per Share Data

and Ratios under Investment Company Accounting included in Note 16, are included only through September 30, 2009 as they are requirements under Investment Company Accounting.

Therefore, certain balances as shown will agree to the Companys

quarterly report on Form 10-Q for the nine months ended September 30, 2009 as opposed to the current financial statements included in this annual report on Form 10-K.

The Consolidated Schedule of Investments is presented only for the year ended December 31, 2008.

The consolidated statement of stockholders equity (deficit) is included for the years ended December 31, 2009, 2008 and 2007.

this statement includes the statement of comprehensive income (loss) for the three months ended December 31, 2009.

Cash flows for the year ended December 31, 2009 were segregated into two columns in the consolidated statements of cash flows to properly report

cash flows in accordance with the accounting in effect during the respective periods.

The nine months ended September 30, 2009 are presented in investment company format and the three months ended December 31, 2009 are presented in operating

company format.

Consolidation of UTEK Real Estate

UTEK Real Estate has been consolidated into the Companys balance sheet as of December 31, 2009.

The following reflects the

components of UTEK Real Estates carrying value as of October 1, 2009:

Accounts receivable

Cost method investments

Other tangible assets

Accounts payable and accrued expenses

Total carrying value

Nature of Business and Significant Accounting Policies

operations in 1997 and were originally incorporated under the laws of the State of Florida, and subsequently under the laws of the State of Delaware in July 1999.

The Company provides services that help clients become

stronger innovators, develop compelling strategies to drive and catalyze growth, rapidly source externally developed technologies, create value from their intellectual property and gain foresight into marketplace and technology developments that

affect their business.

These services are primarily provided throughout the United States (U.S.) and the United Kingdom (UK).

Innovation Consulting Services

The Company provides strategic innovation consulting services to clients to

help them become more efficient by finding new avenues for growth, fighting commoditization, improving return on investment, transforming the organization, and removing barriers to innovation.

Business value is delivered to our clients through

working with a team of seasoned and experienced professionals capable of unlocking an organizations capacity for strategy and innovation.

In addition, the Company provides services to clients that build the capacity for foresight, including monitoring trends, researching topics of interest, forecasting alternative scenarios, developing

technology roadmaps, creating growth platforms and embedding futures thinking within the organization.

The Company also offers innovative futures programs that provide clients with up-to-the-minute knowledge, expert insight, high-level learning

experiences, and opportunities to network with experts and peers.

Sale of Technology Rights

To effectuate a technology transfer, we have historically created a newly formed company to acquire a new technology from a university,

medical center, corporation or federal research laboratory and then sell this newly formed company to our client for securities or cash.

It is our plan that the shares we receive in these exchanges will, in the course of our business, be sold for

cash or other assets.

A benefit of effectuating technology transfers through this process is that such transactions do not result in a current taxable event for us for income tax purposes.

We have not acquired, and do not currently intend to acquire

a new technology from a university, medical center, corporation and federal research laboratory in connection with our technology transfer process without the prior agreement of our client to subsequently acquire such new technology from us.

UTEKs services enable companies to acquire externally developed technologies from universities, university incubators, federal labs,

medical centers, and corporate research laboratories worldwide to augment their internal research and development (R&D) efforts.

A sale of technology rights refers to the process by which these technologies are licensed to companies

for potential commercial development and use.

UTEKs goal is to provide its clients an opportunity to acquire and commercialize innovative technologies primarily developed external to their business.

Subscription and Other Services

Global Technology

The Companys global technology licensing division is designed to help our clients enhance their new product pipeline

through the acquisition of proprietary technologies primarily from universities, medical centers, corporations and federal research laboratories.

The Company may receive cash or unregistered shares of common stock from companies as payment for the

services we provide.

Technology transfers are completed according to the terms set forth in these agreements with our client companies.

Patent Analytic Services

The Companys patent analytic services division uses a team of on-call scientists and industry experts to provide technical and business knowledge to help our clients identify, assess, protect and leverage their

intellectual property assets (IP).

This division helps clients identify the strengths and weaknesses of corporate IP and competitors IP.

This division also identifies gaps in competitors IP portfolios that reveal

opportunities to pursue for our clients.

Information ServicesWebsite Subscriptions

The Companys subscription-based website services include the following:

Pharma Transfer provides a source of research and business development opportunities for the international pharmaceutical market encompassing all areas of

pipeline development, from early-stage discovery, through pre-clinical and clinical trials, to registered products that are all available for co-development or licensing.

TechEx is an online searchable database for life and physical science discoveries.

Knowledge Express is a searchable database of information for licensing professionals, which provides our clients with comprehensive coverage of licensing

agreements, corporate profiles, clinical trials, deals, drug pipelines, drug sales, licensable technologies, patents and royalty rates.

Pharmalicensing is a biopharmaceutical innovation resource designed for life science professionals involved with partnering, licensing and business

Online Licensing Platform

The Companys online licensing services

division provides the following subscription-based website services:

Pharmalicensing is a biopharmaceutical innovation resource designed for life science professionals driving partnering, licensing and business

development worldwide.

Pharmalicensing affords clients the ability to in-license and out-license intellectual property and also provides partnering services, business development reports, industry news and a jobs source for candidates and employers.

TekScout enables companies to outsource unfinished research and development (R&D) projects to scientists from around the world.

provides a platform for companies to supplement internal R&D and resources to accelerate product development.

Principles of

Consolidation

UTEK Corporation commenced operations in 1997, originally incorporated under the laws of the State of Florida and

subsequently under the laws of the State of Delaware in July 1999.

The consolidated financial statements include the accounts of UTEK Corporation and its wholly owned subsidiaries;

We are tracking at over 200,000 visitors per month and developing partnerships with sites such as Patents.com to drive further traffic.

Medical Device Licensing is an online global resource for open innovation, partnering, licensing and business development within the medical

device industry.

Medical Device Licensing benefits from the Pharmalicensing traffic and partnerships as well as establishing some of its own with member associations around the globe to further its reach and exposure.

Knowledge Express is a searchable database of information for licensing professionals, which provides our clients with comprehensive coverage of

licensing agreements, corporate profiles, clinical trials, deals, drug pipelines, drug sales, licensable technologies, patents and royalty rates.

Pharma Transfer provides a source of research and business development opportunities for the international pharmaceutical market encompassing

all areas of pipeline development including, early-stage discovery, pre-clinical and clinical trials and registered products that are all available for co-development or licensing.

TekScout enables companies to outsource unfinished R&D projects to scientists from around the world.

TekScout provides a platform for

companies to supplement internal R&D and resources to accelerate product development.

Global Technology Licensing

The Companys global technology licensing service enables clients to enhance their new product pipeline through the

acquisition of proprietary technologies primarily from universities, medical centers, federal research laboratories, select corporations, and university incubator programs.

Another component of the Companys global technology licensing division is our patent analytic service designed to help our clients

create marketplace value from their intellectual property (IP).

The Company helps clients identify the strengths and weaknesses of their own IP as well as that of companies in the same or adjacent industries.

Additionally, by

identifying gaps and opportunities in the IP landscape, the Company assists clients with developing IP acquisition, disposition, and management strategies.

Principles of Consolidation

The consolidated financial statements include

the accounts of UTEK and its wholly owned subsidiaries:

UTEK Europe, Ltd.

(Europe) and UTEK ip , Ltd.

UTEK ip was closed down in 2008 and all operations of that subsidiary are currently being serviced by UTEK, although the legal entity has not yet been dissolved.

In addition, the legal entities for Innovaro, Ltd., Pharmalicensing, Ltd., Carmi,

Inc., and Social Technologies, Group, Inc.

still exist, but their operations have been assimilated by UTEK and UTEK-Europe.

All intercompany transactions and balances are eliminated in consolidation.

Portfolio investments are held for the purpose of deriving investment income and future capital gains.

The financial results of the Companys

portfolio companies are not consolidated in the Companys financial statements.

(Europe), UTEK ip , Ltd.

(Israel) and UTEK Real Estate Holdings, Inc.

UTEK ip , Ltd.

was dissolved in 2008 and all operations of that subsidiary are currently being

serviced by UTEK.

In addition, the legal entities for Innovaro, Ltd., Pharmalicensing, Ltd.

and Carmi, Inc.

(Strategos) still exist, but their operations have been assumed by UTEK and UTEK Europe, Ltd.

All intercompany transactions and balances are

eliminated in consolidation.

As an investment company, portfolio investments are held for the purpose of deriving investment

income and future capital gains.

The operating results of the Companys portfolio companies, including UTEK Real Estate Holdings, Inc., are not consolidated in the Companys financial statements through September 30, 2009.

Effective October 1, 2009, the Company is reporting as an operating company.

the Company is required to consolidate UTEK Real Estate Holdings, Inc.

and its subsidiaries:

Ybor City Group, Inc., 22nd Street of Ybor City, Inc., ABM of Tampa Bay, Inc., and Cortez 114, LLC (collectively UTEK Real Estate).

liabilities and results of operations of UTEK Real Estate have been included in the Companys consolidated financial statements from October 1, 2009.

As of October 1, 2009, none of the Companys other investments are greater than

20% of the outstanding equity interests of any individual company, and accordingly, equity investment accounting is not warranted for these investments.

Reclassifications

Certain reclassifications have been made to the 2007 and 2006 balances to conform to the 2008 financial statement presentation.

Business Combinations

We determine and allocate the purchase price of an acquired company to the tangible and intangible assets acquired and liabilities assumed as of the business combination date in accordance with Financial Accounting

Standards Board (FASB) Statement No.

Certain reclassifications have been made to the 2008 and

2007 balances to conform to the 2009 financial statement presentation.

Business Combinations

The purchase price allocation process requires us to use significant estimates and assumptions, including fair value estimates, as of the business combination date.

While we use our best estimates and assumptions as a part of the purchase price allocation process to accurately value assets acquired and

liabilities assumed at the business combination date, our estimates and assumptions are inherently uncertain and subject to refinement.

As a result, during the purchase price allocation period, which is generally one year from the business

combination date, we record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill.

In addition, there are contingencies based on earnings included in some of our purchase agreements.

The earnout is

recorded as it is earned over the contingency period, which is generally one to three years from the business combination date.

With the exception of unresolved income tax matters or the earnout of contingent consideration, subsequent to the

purchase price allocation period any adjustment to assets acquired or liabilities assumed is included in our operating results in the period in which the adjustment is determined.

The Company determines and allocates the purchase price of an acquired company to the tangible and intangible assets acquired and liabilities

assumed as of the business combination date in accordance with US GAAP for business combinations.

The purchase price allocation process requires the Company to use significant estimates and assumptions, including fair value estimates, as of the

business combination date.

While the Company uses its best estimates and assumptions as a part of the purchase price

allocation process to accurately value assets acquired and liabilities assumed at the business combination date, its estimates and assumptions are inherently uncertain and subject to refinement.

As a result, during the purchase price allocation

period, which is generally one year from the business combination date, the Company records adjustments to the assets acquired and liabilities assumed based on additional information received, with the corresponding offset to goodwill.

there are contingencies based on earnings (commonly referred to as earnouts) included in some of the Companys purchase agreements entered into during 2008.

The earnout is recorded as it is earned over the contingency period, which is generally

one to three years from the business combination date.

With the exception of unresolved income tax matters or the earnout of contingent consideration, subsequent to the purchase price allocation period any adjustment to assets acquired or

liabilities assumed is included in the Companys operating results in the period in which the adjustment is determined.

In January 2009, the Company adopted new US GAAP for business combinations, which requires a number of changes, including changes in the way assets and liabilities are recognized as a result of business combinations.

US GAAP requires that more assets and liabilities assumed be measured at fair value as of the acquisition date and that liabilities related to contingent consideration be re-measured at fair value in each subsequent reporting period.

requires the capitalization of in-process research and development at fair value and requires the expensing of acquisition-related costs as incurred.

The impact of the adoption of this new US GAAP for business combinations will depend on the

nature of acquisitions completed after the date of adoption.

Under Investment Company Accounting

Through September 30, 2009, the

Company operated as a non-diversified, closed-end management investment company that had elected to be treated as a BDC under the 1940 Act and accounted for investments in accordance with Investment Company Accounting.

Pursuant to the requirements of the 1940 Act, UTEKs Board of Directors was responsible for determining, in good faith, the fair value

of the Companys securities and assets for which market quotations are not readily available.

In making its determination, the Board of Directors considered valuation appraisals provided by an independent valuation firm.

Our equity interests in portfolio companies for which there is no liquid public market are

valued using quoted market prices for identical or similar instruments in active markets.

The determined values are generally discounted to account for the illiquid nature of the investment and minority ownership positions.

The value of our equity

interests in portfolio companies for which market quotations are readily available is based on the public market price on the balance sheet date.

These securities are generally thinly traded and/or carry discounts from the public market value for

certain restrictions on resale.

The Board of Directors based its determination upon, among other things, applicable

quantitative and qualitative factors.

These factors included, but were 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

Without a readily available market value, the value of the 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, and the differences could be material.

Approximately 60% and 28% of the Companys investments owned at September 30, 2009 and

December 31, 2008, respectively, were stated at fair value as determined by the Board of Directors, in the absence of readily available fair values.

The Company used the first-in, first-out (FIFO) method of accounting for sales of its

Under Operating Company Accounting

The Company began reporting as an operating company on October 1, 2009.

In connection therewith, the Company modified the accounting treatment for it investments to conform to US GAAP for

operating companies.

See Note 1 for further discussion of the Companys withdrawal of its election to be treated as an investment company under the 1940 Act and the effects on the Companys financial statements.

Certificates of Deposit

Certificates of deposit are short term investments that are carried at their fair values.

These certificates of deposit collateralize the Companys line of credit as of December 31, 2009.

Available-for-Sale Securities

As of October 1, 2009, the Company classifies all investments in freely tradable equity securities as available-for-sale in accordance with US GAAP and our intentions regarding these instruments.

Investments in equity securities

of public companies continue to be accounted for using the fair value method as long as there is a market in the stock that provides readily determinable fair values for these securities.

These investments are adjusted to fair value at the end of

each quarter, as determined using the assistance of an independent valuation firm.

Unrealized gains and losses are reported in operating company equity as a component of accumulated other comprehensive income (loss) in the consolidated balance

Realized gains and losses from the sale of available-for-sale securities are determined on the FIFO method of accounting and are included as a component of other (income) expense in the consolidated statement of operations.

Should management determine that an available-for-sale security has an other-than-temporary decline in fair value, the Company would

recognize the investment loss in the consolidated statement of operations.

Available-for-sale securities were evaluated for other-than-temporary impairment at December 31, 2009.

See Note 4 for further discussion.

Investments under Cost Method

As of October 1, 2009, the Company classifies all investments in non-marketable equity securities in which we do not have a controlling

financial interest, constituting 20% interest in the company, or significant influence as investments under cost method in accordance with US GAAP.

Pursuant to US GAAP, the fair value of the Companys non-marketable equity securities at

September 30, 2009 became the new cost basis of the investments under cost method on October 1, 2009.

securities classified as investments under cost method will remain at cost basis unless there is impairment.

The Company must determine whether a decline in fair value below the cost basis is other than temporary.

If the decline in fair value is

judged to be other than temporary, the cost basis of the individual security will be written down to fair value as a new cost basis and the amount of the impairment will be included in earnings as a realized loss.

The new cost basis cannot be

adjusted upwards for subsequent recoveries in fair value.

Investments under cost method were considered for impairment at December 31, 2009.

As of December 31, 2009, the Company determined that the fair value of approximately $418,000 of

the Companys investments under cost method exceeded the carrying amount of these investments.

It was not practicable to estimate the fair value of the remaining $170,000 of the Companys investments under cost method and such an estimate

was not made because there were no events or circumstances that could have had a significant adverse effect on the fair value of such investments during 2009.

Realized gains and losses from the sale of investments under cost method are determined on the FIFO method of accounting and are included as a component of other (income) expense in the consolidated

statement of operations.

Cash and Cash Equivalents

The Company considers all highly liquid, fixed income investments with

maturities of three months or less at the time of acquisition to be cash equivalents.

Pursuant to the requirements of the 1940 Act, UTEK Corporations 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 privatelyowned 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 the 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 resale are generally valued at a discount from the market value of the securities as quoted on the national securities exchange.

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.

readily available market value, the value of the 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, and the differences could be

Substantially all of the Companys investments owned at December 31, 2008 and December 31, 2007 (26% and 64% of total assets, respectively), are stated at fair value as determined by the Board of Directors, in the absence of

readily available fair values.

The Company uses the first-in, first-out (FIFO) method of accounting for sales of its investments.

of stock provided by the portfolio companies in exchange for both technology acquisition alliance services and technology transfers are recorded at fair value on the day that the transactions are executed.

The certificates are received subsequent to

the transaction date.

The Company considers all highly liquid, fixed income investments with maturities of three months or less at the time of acquisition to be cash equivalents.

Accounts Receivable

The Company provides an allowance for losses on trade receivables based on a review of the current status of existing receivables and managements evaluation of periodic aging of accounts.

The Company charges off

accounts receivable against the allowance for losses when an account is deemed to be uncollectible.

Company provides an allowance for losses on trade receivables based on a review of the current status of existing receivables and managements evaluation of periodic aging of accounts.

The Company charges off accounts receivable against the

allowance for losses when an account is deemed to be uncollectible.

It is not the Companys policy to accrue interest on past due receivables.

The provision for doubtful accounts and notes was approximately

$124,000 and $75,000 as of December 31, 2008 and 2007, respectively.

Fixed assets are stated at cost, less accumulated depreciation.

Depreciation is recorded using the straight-line method over the estimated useful lives of

the respective assets (generally five and seven years).

Leasehold improvements are amortized over the shorter of the estimated useful life of the assets or lease term.

The carrying amount of all long-lived assets is evaluated periodically to

determine if adjustment to the depreciation and amortization period or the unamortized balance is warranted.

The Company believes that no impairment of fixed assets exists at December 31, 2008.

The provision for doubtful accounts and notes was approximately $83,000 and $124,000 as of

December 31, 2009 and 2008, respectively.

Note Receivable

The Company holds a $1,500,000 note receivable from a privately held company.

The note was received in exchange for the sale of certain of

the Companys investments in January 2009.

The note bears interest at 7% per annum and does not require the payment of such interest or the principal amount of the note until maturity of the note on December 31, 2012.

recorded $96,000 of accrued interest income on the note for the year ended December 31, 2009.

The note is collateralized by a security interest in certain property located in Pasco County, Florida.

are stated at cost, less accumulated depreciation.

Depreciation is recorded using the straight-line method over the estimated useful lives of the respective assets of between 3 and 39.5 years.

Leasehold improvements are amortized over the shorter of

the estimated useful life of the assets or lease term.

The carrying amount of all long-lived assets is evaluated periodically to determine if adjustment to the depreciation and amortization period or the unamortized balance is warranted.

believes that no impairment of fixed assets exists at December 31, 2009 and 2008.

Maintenance and repairs are charged to operations when incurred.

Betterments and renewals are capitalized.

When fixed assets are sold or otherwise

disposed of, the asset account and related accumulated depreciation account are relieved, and any gain or loss is included in the statement of operations.

Betterments and renewals

are capitalized.

When fixed assets are sold or otherwise disposed of, the asset account and related accumulated depreciation account are relieved, and any gain or loss is included as a component of other (income) expense in the consolidated

statement of operations.

Goodwill and Intangible Assets

Goodwill represents the excess of the purchase price over the fair value of the assets

acquired in connection with the Companys acquisitions.

Intangible assets represent the cost of trade marks, trade names, websites, customer lists, non-compete agreements, and proprietary processes and software obtained in connection with

certain of the Companys acquisitions.

The Company adheres to the Statement of Financial Accounting Standards No.

142, Goodwill and Other Intangible Assets.

Accordingly, goodwill is not being amortized but is subject to annual impairment

Goodwill represents the excess of the purchase price over the fair value of the assets acquired in connection with the Companys acquisitions.

Intangible assets represent the cost of trade marks,

trade names, websites, customer lists, non-compete agreements, and proprietary processes and software obtained in connection with certain of the Companys acquisitions.

In accordance with US GAAP, goodwill and intangible assets determined

to have indefinite lives are not subject to amortization.

Goodwill and indefinite-lived intangible assets are reviewed for impairment by applying a fair value based test on an annual basis or more frequently if circumstances indicate a potential

Intangible assets with finite lives are amortized over their estimated useful lives.

Impairment of Long-lived Assets

We account for long-lived asset impairments under Statement of Financial Accounting Standards No.

144 (SFAS 144), Accounting for the

Impairment or Disposal of Long Lived Assets .

Consistent with prior guidance, SFAS 144 requires a three-step approach for recognizing and measuring the impairment of assets to be held and used.

The Company recognizes impairment losses on

long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets carrying amounts.

The impairment loss is measured by comparing

the fair value of the asset to its carrying amount.

Fair value is estimated based on discounted future cash flows.

Assets to be sold are classified as Discontinued Operations, stated at the lower of the assets carrying amount or fair value and

depreciation is no longer recognized.

Long-lived assets are tested for impairment on at least an annual basis.

Impairment testing is required more often than

annually if an event or circumstance indicates that an impairment, or decline in value, may have occurred.

In conducting its impairment test, the Company compares the fair value of each of its reporting units to the related book value.

value of a reporting unit exceeds its net book value, long-lived assets are considered not to be impaired.

If the net book value of a reporting unit exceeds it fair value, an impairment loss is measured and recognized.

The Company conducts its

annual impairment test using balances as of December 31.

Derivative Liability

US GAAP requires bifurcation of embedded derivative instruments and measure of their fair value for accounting purposes.

freestanding derivative instruments such as certain warrants are also derivative liabilities.

We estimate the fair value of these instruments using the Black-Scholes option pricing model.

Derivative liabilities are recorded at fair value at

inception and then are adjusted to reflect fair value at the end of each quarter, with any increase or decrease in the fair value being recorded in results of operations as a component of other (income) expense.

At December 31, 2009, we had a derivative instrument related to our issuance of a Note and Warrant Purchase Agreement as further

discussed in Note 7.

The warrants have features that make their exercise price variable.

We used the Black-Scholes model to determine the fair value of these warrants at inception, which resulted in a derivative liability of approximately $555,000.

We used the Black-Scholes model to determine the fair value of the warrants again as of December 31, 2009, which resulted in a derivative liability of approximately $665,000.

The increase in the fair value of the derivative liability from

inception is primarily related to the increase in the market price of our stock during the period.

Foreign Currency Translation

The Company translates the assets and liabilities of its non-U.S.

functional currency subsidiaries into dollars at the current rates of exchange in effect at the end of each reporting period.

Revenues and expenses are

translated using rates that approximate those in effect during the period.

Translation adjustments are included in the Consolidated Statements of Net Assets under the caption foreign currency translation adjustment.

The functional currency of the Companys UK operations is that countrys local currency.

The Company translates

the assets and liabilities of its UK subsidiary into U.S.

Dollars at the exchange rates in effect at the end of each reporting period.

Revenues and expenses of the Companys UK operations are translated into U.S.

Dollars using weighted average

exchange rates during the period.

Through September 30, 2009, the effects of foreign currency translation adjustments are reported as a component of investment company equity in the consolidated statement of assets and liabilities.

October 1, 2009, the translation adjustments are included in operating company equity as a component of accumulated other comprehensive income (loss) in the consolidated balance sheet.

Foreign currency transaction gains and losses are included

in other (income) expense in the consolidated statement of operations as of October 1, 2009 and are immaterial for all periods presented.

Revenue Recognition

Innovation Consulting and Membership Services

Related to the Companys acquisition of Strategos (see Note 3), the

Company recognizes certain strategic consulting revenues in accordance with Statement of Position 81-1, Accounting for Performance of Construction-Type and Certain Production-Type Contracts .

Accordingly, revenues on fixed fee contracts are

recognized under the percentage-of-completion methods of accounting, whereby contract revenues are recognized on a pro rata basis based upon costs incurred to date compared to total estimated contract costs.

In cases where losses are estimated to be

incurred upon completion of contracts, the full provision for such losses is charged to operations when they become known.

In addition, some of the Companys contracts provide for substantial contingent fees if future performance milestones are

successfully met.

Contingent fees are recorded based on the Companys estimate of the likelihood of reaching future performance milestones.

Related to the Companys acquisition of Social Technologies Group, Inc.

(see Note 3), the Company has certain other consulting revenue that is derived from the sale of services in technology foresight, forecasting, scenario playing,

vision, creativity and leadership, as well as the sale of services to provide for the design, development and implementation of custom software applications.

Consulting services revenue is recognized when all the deliverables associated with the

consulting contract have been provided to the customer.

Vendor specific objective evidence is not available to allocate among the respective deliverables.

Accordingly, the Company recognizes revenue at the point when all the deliverables have been

provided to the customer.

Innovation Consulting Services

Related to the Companys Strategos

division, revenues on fixed fee contracts are recognized on a pro rata basis based upon costs incurred to date compared to total estimated contract costs.

Prior to the commencement of a client engagement, the Company and the client agree on fees for

services based upon the scope of the project, staffing requirements and the level of client involvement.

Total revenues are comprised of professional fees for services rendered to clients plus reimbursement of out-of-pocket expenses and exclude

applicable taxes.

The Company bills clients for services and expenses incurred in accordance with the terms of the client engagement agreement.

Related to the Companys Social Technologies division, the Company has certain other consulting revenue that is derived from the sale of services in technology foresight, forecasting, scenario

playing, vision, creativity and leadership, as well as the sale of services to provide for the design, development and implementation of custom software applications.

Vendor specific objective evidence is not available to allocate among the

respective deliverables in contracts with multiple deliverables.

Accordingly, the Company recognizes consulting services revenue at the point when all the deliverables associated with the consulting contract have been provided to the customer.

Before the Company recognizes revenue, the following criteria must be met:

Evidence of a financial arrangement or agreement must exist between the Company and its customer.

Purchase orders, signed contracts, or electronic confirmation are three

examples of items accepted by the Company to meet this criterion.

Purchase orders, signed contracts, or electronic confirmations

are three examples of items accepted by the Company to meet this criterion.

Delivery of the products or services must have occurred.

The Company treats either physical or electronic delivery as having met this requirement.

The Company offers a

60-day free trial on beginning a subscription engagement and revenue is not recognized during this time.

After the free trial ends the Company recognizes revenue ratably over the subscription period.

The price of the products or services is fixed and measurable.

1 unchanged sentence

Collectability of a sale is determined on a customer-by-customer basis.

Typically the Company sells to

large corporations which have demonstrated an ability to pay.

Innovation consulting membership services consist of Futures

Consortium, Futures Observatory and Futures Interactive management products that allow clients access to information, research, databases and workshops that provide information on trends in different technologies and industries.

recognized on a contractual basis, generally on an annual basis.

Innovation consulting membership services consist of Futures Consortium and Futures Interactive management

products that allow clients access to information, research, databases and workshops that provide information on trends in different technologies and industries.

Revenues are recognized on a contractual basis, generally on an annual

These fees are generally collected in advance of the membership period and the revenue is recognized ratably over the respective months, as services are provided.

Certain other consulting revenues are billed on an hourly basis and recognized as incurred.

Differences between the timing of billings and the recognition of revenue are recognized as either unbilled services (included as a

component of prepaid expenses and other assets) or deferred revenue in the consolidated balance sheets.

Client prepayments and retainers are classified as deferred revenue and recognized over future periods as earned.

Time-and-expense billing arrangements generally require the client to pay based on the number of hours worked by our consulting

professionals at agreed-upon rates.

Time-and-expense revenues are billed and recognized as incurred.

Sale of Technology Rights

The Company recognizes revenue from the sale of technology rights upon the

exchange of the securities of our newly formed companies for securities in the portfolio company that acquires such newly formed company and the technology held by such newly formed company.

The Company records revenue based on the fair value of the

consideration received.

In most cases, the consideration received for the rights is unregistered shares of common or preferred stock of the portfolio company.

The Company recognizes revenue from the sale of technology rights upon the exchange of the securities of its newly formed

companies for cash or securities in the portfolio company that acquires such newly formed company and the technology held by such newly formed company.

The Company records revenue based on the fair value of the consideration received.

Historically,

the consideration received for the rights has been unregistered shares of common or preferred stock of the portfolio company.

Subscription and Other Services

Revenue from the sale of subscriptions to the Companys websites generally is received in the form of cash and initially is deferred and subsequently recognized ratably over the term of the subscription, which is

typically one year.

Technology acquisition alliance services are performed pursuant to service agreements in which UTEK provides

consulting services by identifying and evaluating technology acquisition opportunities in exchange for unregistered shares of the portfolio company or cash.

Revenue from the sale of subscriptions to the Companys websites generally is received in the form of cash and initially is deferred and

subsequently recognized ratably over the term of the subscription, which is typically one year.

Global technology licensing

services are performed pursuant to service agreements in which UTEK provides consulting services by identifying and evaluating technology licensing opportunities in exchange for cash, or in previous years, unregistered shares of the portfolio

These agreements are typically cancelable with thirty days notice.

Revenue from technology acquisition 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 technology acquisition 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 income based

on the fair value of the consideration received.

At December 31, 2008, the Company did not have any technology acquisition alliance agreements for which payment was to be received in stock.

Direct Costs of Innovation Consulting Services

Related to our technology foresight business, certain direct costs of innovation consulting services consisting primarily of various engineering and design costs associated with consulting services are expensed as incurred as the Company

has no formal process for tracking these costs.

Revenue from global technology licensing

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 global technology licensing 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 income based on the fair value of the consideration received.

At December 31, 2009 and 2008, the Company did not have any global technology

licensing agreements for which payment was to be received in stock.

Direct Costs Related to Revenue

Direct costs of innovation consulting services are comprised of salaries and related taxes, bonuses, certain outside services and other

direct project costs related to innovation consulting services revenue.

Acquisition of technology rights costs consist of the direct costs associated with technology transfers, which include cash to further accelerate commercialization efforts,

license fees to acquire new technologies, consulting fees with the inventor of the technologies, and sponsored research fees with the university or research facility transferring the technologies.

The Company does not report direct costs associated

with its subscription and other services revenue as these costs have not been quantified.

Stock-Based Compensation

At December 31, 2009, the Company had two stock-based equity compensation plans, which are described more fully in Note 9.

The Company accounts for stock option grants in accordance with the provisions of Statement of Financial Accounting Standards No.

123(R) (SFAS

123(R)), Share-Based Payment .

Under the modified prospective approach of SFAS 123(R), compensation cost recognized during the years ended December 30, 2008, 2007 and 2006 includes compensation cost for all share-based payments

granted prior to, but not yet vested as of January 1, 2006, based on the grant date fair value estimated in accordance with the original provisions of SFAS 123, and compensation cost for all share-based payments granted subsequent to

January 1, 2006, based on the grant date fair value estimated in accordance with the provisions of SFAS 123(R).

Deferred taxes are provided on the asset and liability method whereby deferred tax assets are recognized for deductible temporary differences and

operating loss and tax credit carry forwards and deferred tax liabilities are recognized for taxable temporary differences.

The Company accounts for stock option grants in accordance with US GAAP.

Stock-based compensation cost recognized during the years ended

December 31, 2009, 2008 and 2007 includes compensation cost for all share-based payments granted prior to, but not yet vested as of January 1, 2006 and compensation cost for all share-based payments granted subsequent to January 1,

2006, based on their respective grant date fair values estimated in accordance with US GAAP.

The Company recognizes compensation expense on a straight-line basis over the requisite service period.

The Company uses the Black-Scholes option pricing

model to estimate fair value of stock option grants at the grant date.

Determination of the fair values of stock option

grants at the grant date requires judgment, including estimating the expected term of the relevant grants and the expected volatility of the Companys stock.

Additionally, management must estimate the amount of stock option grants that are

expected to be forfeited.

The expected term of options granted represents the period of time that the options are expected to be outstanding and is based on historical experience of similar grants, giving consideration to the contractual terms of

the grants, vesting schedules and expectations of future employee behavior.

The expected volatility is based upon our historical market price at consistent points in a period equal to the expected life of the options.

Expected forfeitures are based

on historical experience and expectations of future employee behavior.

Deferred taxes are provided on the asset and liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry forwards and deferred

tax liabilities are recognized for taxable temporary differences.

Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases.

tax benefits for net operating loss carryforwards are recognized to the extent that realization of these benefits is considered more likely than not.

Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is

more likely than not that some portion or all of the deferred tax assets will not be realized.

For federal and state income tax purposes,

we are taxed at regular corporate rates on ordinary income and recognize gains on distributions of appreciated property.

We are not entitled to the special tax treatment available to BDCs that elect to be treated as regulated investment companies

under the Internal Revenue Code because, among other reasons, we do not distribute at least 90% of investment company taxable income as required by the Internal Revenue Code for such treatment.

On January 1, 2007, the Company adopted the provisions of Financial Accounting Standards Board

Interpretation No.

48 (FIN 48), Accounting for Uncertainty in Income Taxes, which clarifies the accounting for uncertainty in income taxes recognized in an enterprises financial statements in accordance with FASB Statement

109, Accounting for Income Taxes.

FIN 48 provides guidance on the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.

FIN 48 also provides guidance on derecognition,

Future tax benefits for net operating loss carryforwards are

recognized to the extent that realization of these benefits is considered more likely than not.

Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the

deferred tax assets will not be realized.

For federal and state income tax purposes, the Company is taxed at regular

corporate rates on ordinary income and recognizes gains on distributions of appreciated property.

As an investment company, the Company was not entitled to the special tax treatment available to BDCs that elect to be treated as regulated investment

companies under the Internal Revenue Code because, among other reasons, the Company did not distribute at least 90% of investment company taxable income as required by the Internal Revenue Code for such treatment.

Certain guidance located within ASC Topic 740, Income Taxes , clarifies the accounting for uncertainty in income taxes recognized in

an enterprises financial statements.

Topic 740 provides guidance on the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.

Topic 740 also provides guidance on derecognition,

classification, interest and penalties, accounting in interim periods, disclosures, and transition.

As of January 1, 2007, the Company had no unrecognized tax benefits and did not record any cumulative effect adjustment to net assets as a

result of adopting FIN 48.

During 2008, management determined that it was more likely than not that net operating loss carryforwards

in UTEK would not be utilized in the future and, accordingly, a valuation allowance of $10.8 million was recorded against the related deferred tax asset.

A portion of the valuation allowance ($5.1 million) was recorded as part of the provision

for income tax expense and a similar portion ($5.7 million) is included in the change in unrealized depreciation of investments.

The valuation allowance resulted in a significant additional decrease to our net decrease in net assets from

operations and per share values.

Net realized losses on investments in the accompanying consolidated statements of operations are net of

income tax expense (benefit) of $(2,553,399), $(873,256) and $545,163 for the years ended December 31, 2008, 2007 and 2006, respectively.

Change in unrealized appreciation (depreciation) of investments in the accompanying consolidated

statements of operations is net of deferred tax benefit of $(3,938,435), $(6,519,665) and $(15,540,139) for the years ended December 31, 2008, 2007 and 2006, respectively.

In addition, a portion of the aforementioned valuation allowance ($5.7

million) was included in the change in unrealized depreciation for the year ended December 31, 2008.

Net Realized Gains or Losses and Net Change

in Unrealized Appreciation or Depreciation

Realized gains or losses are measured by the difference between the net proceeds from the

repayment or sale and the original cost basis of the investment without regard to unrealized appreciation or depreciation previously recognized.

The original cost basis of the securities we receive in connection with our technology acquisition

alliance agreements and technology transfers is equal to the amount of revenue we recognized upon the receipt of such securities.

Net change in unrealized appreciation or depreciation of investments reflects the change in portfolio investment values

during the reporting period, including the reversal of previously recorded unrealized appreciation or depreciation when gains or losses are realized.

The Company had no uncertain tax positions for the years ended December 31, 2009, 2008 and 2007.

The Company does not have any income tax benefit related to its net loss from operations in 2009, nor does it have a deferred tax asset

related to its net operating loss carryforward, because of a 100% valuation allowance.

The Company does have an income tax benefit from the reversal of a deferred tax liability related to the impairment of an indefinite-lived intangible asset and

from foreign tax for the year ended December 31, 2009.

Net Realized Gains or Losses and Net Change in Unrealized Appreciation or

Depreciation from Investment Company Activity

Realized gains or losses are measured by the difference between the net

proceeds from the repayment or sale and the original cost basis of the investment without regard to unrealized appreciation or depreciation previously recognized.

The original cost basis of the securities received in connection with global

technology licensing agreements and technology transfers is equal to the amount of revenue recognized upon the receipt of such securities.

Net change in unrealized appreciation or depreciation of investments through September 30, 2009 reflects

the change in portfolio investment values during the reporting period, including the reversal of previously recorded unrealized appreciation or depreciation when gains or losses are realized.

Earnings per Share (EPS)

Basic earnings per share is computed on the basis of the weighted-average number of shares of

common stock outstanding during the period.

Diluted earnings per share is computed on the basis of the weighted-average number of shares of common stock outstanding plus the effect of dilutive potential common shares outstanding during the period

using the treasury stock method.

The Companys dilutive potential common shares consist of outstanding stock options.

Components of

basic and diluted per share data are as follows:

Basic earnings per share is computed on the basis of the weighted-average number of shares of common stock outstanding during the period.

Diluted earnings per share is computed on the basis of the weighted-average number of shares of common

stock outstanding plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method.

The Companys dilutive potential common shares consist of outstanding stock options and warrants.

Components of basic and diluted per share data are as follows:

Ended Dec 31,

Ended Sept 30,

Weighted average outstanding shares of common stock

Dilutive effect of stock options

Dilutive effect of stock options and warrants

Common stock and common stock equivalents

Shares excluded from calculation of diluted EPS(1)

These shares attributable to outstanding stock options were excluded from the calculation of diluted EPS because their inclusion would have been anti-dilutive, primarily as a result

of the net decrease in net assets from operations during the period.

These shares attributable to outstanding common stock options and warrants were excluded from the calculation of diluted EPS because their inclusion would have been

anti-dilutive, primarily as a result of the net loss/ net decrease in net assets from operations during the period.

Dividends to Shareholders

Dividends to shareholders are recorded on the date of declaration.

Financial Instruments and Concentrations of Credit

The Companys financial instruments consist of investments, U.S.

Treasuries and certificates of deposit, cash and cash

equivalents, accounts receivable, accounts payable and accrued expenses.

The fair value of trade accounts receivable and payable and certain accrued expenses approximate their carrying amounts in the financial statements due to the short maturity of

such instruments.

The fair value of U.S.

Treasuries and certificates of deposit is recorded based upon their market value.

The fair value of all other investments is determined by the Board of Directors as further discussed in Note 2.

Financial instruments with significant credit risk include investments and cash and cash equivalents.

The Company invests its cash and cash equivalents

Treasuries and certificates of deposit with high credit quality financial institutions.

Financial Instruments and Concentrations of Credit Risk

The Companys financial instruments consist of investments, certificates of deposit, cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, long-term debt and the

derivative liability.

The fair value of trade accounts receivable and payable and certain accrued expenses approximate their carrying amounts in the financial statements due to the short maturity of such instruments.

The fair value of certificates

of deposit is recorded based upon their market value.

The fair value of all other investments is determined as further discussed in Note 4.

The fair value of the derivative liability is determined as further described in Note 7.

The estimated fair

value of the Companys long-term debt at December 31, 2009 is not materially different from the carrying value of $6.3 million.

Financial instruments with significant credit risk include investments, certificates of deposit and cash and cash equivalents.

The Company invests its cash and cash equivalents and certificates of deposit

with high credit quality financial institutions.

Certain cash and cash equivalents were in excess of FDIC insurance limits at December 31, 2009.

The Company has not experienced any losses on

such accounts.

The Company had two major clients during the year ended December 31, 2008 and three major clients during the year

ended December 31, 2007.

Major clients, those generating greater than 10% of total income from operations, accounted for approximately 27% and 43% of the Companys sales during the years ended December 31, 2008 and 2007, respectively.

In addition, two clients accounted for approximately 34% of accounts receivable at December 31, 2008.

The Companys most

significant portfolio investments at December 31, 2008 were in UTEK Real Estate Holdings, Inc., Advanced Medical Isotope Corporation, World Energy Solutions, Inc., MiMedx Group, Inc.

and Cyberlux Corporation.

These five investments totaled $9.6

million in fair value and represented 80% of our investments, excluding our investments in U.S.

Treasuries and certificates of deposits, and 21% of total assets at December 31, 2008.

The Company has not experienced any losses on such accounts.

The Company had one major customer during the year ended December 31, 2009, two major customers during the year ended December 31,

2008 and three major customers during the year ended December 31, 2007.

Major customers, those generating greater than 10% of total income from operations, accounted for approximately 10%, 27% and 43% of the Companys revenue during the

years ended December 31, 2009, 2008 and 2007, respectively.

In addition, one customer accounted for approximately 17% of accounts receivable at December 31, 2009.

Use of Estimates

The preparation of the

Companys consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that could affect the reported amounts of assets and

liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period.

The most significant estimates relate to the fair value of the

investments, stock-based compensation and the purchase price allocation process for business combinations.

The preparation of the Companys consolidated

financial statements in conformity with US GAAP requires management to make estimates and assumptions that could affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the

financial statements and the reported amounts of revenue and expenses during the reporting period.

The most significant estimates relate to revenue recognition, the fair value of certain investments, stock-based compensation, the carrying values of

goodwill, intangible assets and the derivative liability, and the purchase price allocation process for business combinations.

Actual results could differ from those estimates.

Recently Issued Accounting Pronouncements

Effective January 1, 2008, the Company adopted Statement of Financial

Accounting Standards (SFAS) No.

157, Fair Value Measurements as it relates to financial assets and liabilities recognized or disclosed on a recurring basis.

The effective date of this Statement for non-financial assets and

liabilities that are not recognized or disclosed on a recurring basis has been delayed to fiscal years beginning after November 15, 2008.

157 defines fair value, establishes a framework for measuring fair value in accordance with

generally accepted accounting principles, and expands disclosures about fair value measurements.

The adoption of the effective portion of SFAS No.

157 expanded the Companys disclosures regarding the fair value measurements of its

The adoption of the remaining portion of SFAS No.

157 will not have a significant effect on the Companys consolidated financial statements.

Effective January 1, 2008, the Company adopted SFAS No.

159, The Fair Value Option for

Financial Assets and Financial Liabilities including an amendment of FASB Statement No.

159 expands the use of fair value measurement by permitting entities to choose to measure many financial instruments and certain

other items at fair value that are not currently required to be measured at fair value.

The Companys most significant financial instruments are its investments, which are currently carried at fair value.

The Company has not adopted the

fair value provisions of SFAS No.

159 for any of its other financial assets or liabilities, and therefore, there is no effect on our results of operations or financial position.

In March 2008, the FASB issued SFAS No.

161, Disclosures about Derivative Instruments and Hedging Activities .

additional disclosures related to the use of derivative instruments, the accounting for derivatives and the financial statement impact of derivatives.

161 is effective for fiscal years beginning after November 15,

The adoption of SFAS No.

161 will not impact the Companys consolidated financial statements.

In April 2008, the FASB

issued FASB Staff Position (FSP) FAS 142-3, Determination of the Useful Life of Intangible Assets.

FSP FAS 142-3 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life

of a recognized intangible asset under FASB Statement No.

142, Goodwill and Other Intangible Assets.

FSP FAS 142-3 is effective for fiscal years beginning after December 15, 2008 and early adoption is prohibited.

The adoption of this

statement will not have a material effect on the Companys financial statements.

In May 2008, the FASB issued SFAS No.

The Hierarchy of Generally Accepted Accounting Principles .

162 identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of

nongovernmental entities that are presented in conformity with generally accepted accounting principles in the United States.

It is effective 60 days following the SECs approval of the Public Company Accounting Oversight Board amendments to AU

Section 411, The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles .

The adoption of this statement will not have a material effect on the Companys financial statements.

Investments at December 31, 2008

and December 31, 2007 were valued at fair value as determined by the Board of Directors, with the assistance of appraisals provided by an independent valuation service provider, in the absence of readily available market values.

The values assigned to these securities are based upon available information and may not reflect amounts that could be realized if the Company found it

necessary to immediately sell such securities, or amounts that ultimately may be realized.

Accordingly, the fair values included in the accompanying schedule of investments may differ from the values that would have been used had a ready market

existed for these securities and such differences could be material.

The 1940 Act prohibits the Company from acquiring (i) more than

3% of the total outstanding shares of another investment company;

(ii) shares of another investment company having an aggregate value in excess of 5% of the value of the Companys total assets;

or (iii) shares of another registered

investment company and all other investment companies having an aggregate value in excess of 10% of the value of the Companys total assets.

Subsequent to the Companys acquisition of shares of common stock in HydroFlo, Inc., the Company

became aware that HydroFlo, Inc.

was a closed-end management investment company that had elected to be treated as a BDC under the 1940 Act.

Because the Companys ownership of HydroFlo, Inc.

exceeded certain of the limits set forth above, the

Company made a gift of 5,100,000 shares of HydroFlo, Inc.s common stock to certain nonprofit organizations during the year ended December 31, 2006.

The fair market value of such shares immediately prior to such gift was approximately

As a result, the Company recorded an expense in the amount of $663,000, which is included in general and administrative expenses in the accompanying statement of operations for the year ended December 31, 2006.

The Company also elected to abandon its right, title and interest in and to 400,000 shares of common

stock of HydroFlo, Inc.

because HydroFlo, Inc.

may have issued such shares in violation of the 1940 Act.

Such shares were originally issued by HydroFlo, Inc.

to the Company pursuant to a technology acquisition alliance agreement.

resulted in the Companys recognition of a $7,000 capital loss, net of income tax, during the year ended December 31, 2006.

Company values substantially all of its investments at fair value as determined in good faith by the Board of Directors in accordance with the Companys valuation policy and the provisions of the Investment Company Act of 1940 and SFAS

157 establishes a fair value hierarchy that encourages and is based on the use of observable inputs, but allows for unobservable inputs when observable inputs do not exist.

Inputs are classified into one of three

Level 1Quoted prices (unadjusted) in active markets for identical assets

Level 2Inputs other than quoted prices that are observable to the market participant for the asset or quoted prices in a market that is not active

Level 3Unobservable inputs

When there are multiple inputs for determining the fair value of an investment, the Company classifies the investment in total based on the lowest level input that is significant to the fair value measurement.

Assets measured at fair value on a recurring basis by level within the fair value hierarchy at December 31, 2008, were as follows:

Fair Value Measurements at Reporting Date Using

Fair Value at

Quoted Prices in

Active Markets for

Identical Assets

Significant Other

Observable Inputs

Inputs (Level 3)

In May 2008, the Company received repayment of its entire loan receivable held with certain

subsidiaries of UTEK Real Estate Holdings, Inc.

This loan receivable was previously included in the Companys investment portfolio at December 31, 2007.

This repayment resulted in additional cash inflows of $2 million during 2008.

Technology Transfers:

technology transfers are generally completed according to our technology acquisition alliance service agreements with our clients.

the year ended December 31, 2008, we completed the following six technology transfers and assisted Artillium Plc in a technology transfer:

Name of Company Acquiring the

Newly Formed Company

Consideration

Unregistered Shares or

RIM Semiconductor Company

Broadband Distance Systems, Inc.

$125,000 cash(2)

RIM Semiconductor Company

Multi-Carrier Communications, Inc.

Platina Energy Group Inc.

Enhanced Oil Recovery Technologies, Inc.

92,000 preferred(3)

World Energy Solutions, Inc.

Advanced Alternative Energy, Inc.

100,000 preferred(4)

CSMG Technologies, Inc.

Carbon Capture Technologies, Inc.

World Energy Solutions, Inc.

H-Hybrid Technologies, Inc.

100,000 preferred(5)

During the year ended December 31, 2007, we completed the following sixteen technology transfers:

Name of Company Acquiring

the Newly Formed Company

Newly Formed Company

Consideration

Unregistered Shares*

Manakoa Services Corporation

Infinite Identification Technologies, Inc.

95,000 preferred(6)

Cyberlux Corporation

Hybrid Lighting Technologies, Inc.

50,000 preferred(7)

26,500,000 common

CytoDyn, Inc.

Advanced Genetic Technologies, Inc.

100,000 preferred(8)

Material Technologies, Inc.

Stress Analysis Technologies, Inc.

47,500 preferred(9)

Liberty Diversified Holdings, Inc.

Sero Tonin Solutions, Inc.

63,981 preferred(10)

Metamorphix Global, Inc.

Flex Crete Technologies, Inc.

$200,000 cash

Klegg Electronics, Inc.

Tempo Control Technologies, Inc.

Avalon Oil and Gas, Inc.

Leak Location Technologies, Inc.

Material Technologies, Inc.

Damage Assessment Technologies, Inc.

Klegg Electronics, Inc.

Klegg Network Storage Technologies, Inc.

Material Technologies, Inc.

Non-Destructive Assessment Technologies, Inc.

Pathway One, Plc

WebMed Technologies, Inc.

MachineTalker, Inc.

Wideband Detection Technologies, Inc.

World Energy Solutions, Inc.

Hydrogen Safe Technologies, Inc.

NeoStem, Inc.

Stem Cell Technologies, Inc.

MachineTalker, Inc

Micro Wireless Technologies, Inc.

During the year ended December 31, 2006, we completed the following twenty-nine technology

Name of Company Acquiring

the Newly Formed Company

Newly Formed Company

Consideration

Unregistered Shares*

Fuel FX International, Inc.

Emissions-Detection Technologies, Inc.

Broadcast International, Inc.

Video Processing Technologies, Inc.

Strategic Wireless Solutions, Inc.

Trio Industries Group, Inc.

Ultra Fine Coating Systems, Inc.

American Soil Technologies, Inc.

Advanced Fertilizer Technologies, Inc.

Advanced Refractive Technologies, Inc.

Ocular Therapeutics, Inc.

Trio Industries Group, Inc.

Natural Adhesive Technologies, Inc.

Advanced Refractive Technologies, Inc.

Advanced Glaucoma Technologies, Inc.

Name of Company Acquiring

the Newly Formed Company

Newly Formed Company

Consideration

Unregistered Shares*

UBA Technology, Inc.

Intellitouch Technologies, Inc.

48,614,797(14)

Industrial Biotechnology Corp.

Bio-Repellant Technologies, Inc.

Kwikpower International Plc

Hydrocarbon Synthesis Technologies, Inc.

Kwikpower International Plc

Advanced BioEnergy Technologies, Inc.

Trio Industries Group, Inc.

Advanced Powder Coating Technologies, Inc.

Kwikpower International Plc

Advanced Biofuel Technologies, Inc.

Xethanol Corporation

Advanced Biomass Gasification Technologies, Inc.

Klegg Electronics, Inc.

Smart Speaker Technologies, Inc.

Avalon Oil and Gas, Inc.

Ultrasonic Mitigation Technologies, Inc.

DME Interactive Holdings, Inc.

Multimedia Control Technologies, Inc.

Cytodyn, Inc.

Advanced Influenza Technologies, Inc.

NetFabric Holdings, Inc

Intrusion Detection Technologies, Inc.

Material Technologies, Inc.

Materials Monitoring Technologies, Inc.

Industrial Biotechnology Corp.

Advanced Pheromone Technologies, Inc.

Liberty Diversified Holdings, Inc.

Innovative Packaging Technologies, Inc.

Advanced Medical Isotope Corp.

Neu-Hope Technologies, Inc.

World Energy Solutions, Inc.

Pure Air Technologies, Inc.

Klegg Electronics, Inc.

Universal Wireless Technologies, Inc.

Avalon Oil & Gas, Inc.

IntelliWell Technologies, Inc.

Cyberlux Corporation

SPE Technologies, Inc.

Cargo Connection Logistics Holding, Inc.

Nuclear Material Detection Technologies, Inc.

Unless otherwise noted, the Company received unregistered shares of common stock of the company acquiring the Companys newly formed company.

Represents the valuation price per share at the date of acquisition.

Represents a technology transfer assistance fee we received for assisting Artilium Plc with an acquisition.

Preferred F shares convertible into common shares based on a value of $1,324,800.

Preferred B shares convertible into common shares based on a value of $3,500,000.

Preferred B shares convertible into common shares based on a value of $3,750,000.

Preferred A shares convertible into common shares based on a value of $3.8 million.

Preferred C shares convertible into common shares based on a value of $768,500.

Preferred A shares convertible into common shares based on a value of $1.3 million.

Preferred E shares convertible into common shares based on a value of $926,250.

Preferred D shares convertible into common shares based on a value of $638,000.

Preferred B shares convertible into common shares based on a value of $2.1 million.

Preferred C shares convertible into common shares based on a value of $2.8 million.

Preferred D shares convertible into common shares based on a value of $2.0 million.

The Company also received 95,000 Preferred A shares convertible into common shares based on a value of $2.5 million.

Consideration consisted of a £1.2 million convertible debenture.

The Company has recognized the value of the investment based upon the fair value of the 2.4 million

common shares underlying the convertible debenture.

Consideration consisted of a £1.3 million convertible debenture.

The Company has recognized the value of the investment based upon the fair value of the 2.5 million

common shares underlying the convertible debenture.

Consideration consisted of a £1.2 million convertible debenture.

The Company has recognized the value of the investment based upon the fair value of the 2.3 million

common shares underlying the convertible debenture.

5% Preferred A shares convertible into common shares based on a value of $3,182,500.

Preferred A shares convertible into common shares based on a value of $4,050,000.

In 2008, the Company acquired four companies in an effort to expand the range of innovation services it

provides through innovation consulting, foresight research and the facilitation of buying and selling intellectual property for our clients.

On April 17, 2008, UTEK purchased all of the shares of Carmi, Inc., a 100% owned subsidiary of Strategos, LLC, wherein Carmi, Inc.

In October 2008, the FASB amended ASC Topic 820, Fair Value Measurements and Disclosures .

Topic 820 provides an illustrative

example of how to determine the fair value of a financial asset in an inactive market.

Topic 820 does not change the fair value measurement principles set forth in the original literature.

Since adopting Topic 820 in January 2008, UTEKs

practices for determining the fair value of its investment portfolio have been, and continue to be, consistent with the guidance provided in the example in Topic 820 and Topic 825, Financial Instruments .

Therefore, UTEKs adoption of

Topics 820 and 825 did not affect its practices for determining the fair value of its investments and did not have a material effect on its consolidated financial statements.

In April 2009, the FASB amended ASC Topic 805, Business Combinations .

Topic 805 establishes a model to account for certain

pre-acquisition contingencies.

Under Topic 805, an acquirer is required to recognize at fair value an asset acquired or a liability assumed in a business combination that arises from a contingency if the acquisition-date fair value of that asset or

liability can be determined during the measurement period.

If the acquisition-date fair value cannot be determined, then the acquirer should follow the recognition criteria in ASC Topic 450, Contingencies , and ASC Topic 450-20, Loss

Contingencies .

Topic 805 was effective for the Company beginning January 1, 2009, and will apply prospectively to business combinations completed subsequent to that date.

The impact of the adoption of Topic 805 will depend on the nature of

acquisitions completed after the date of adoption.

In June 2009, the FASB issued ASC Topic 105, Generally Accepted

Accounting Principles .

The FASB Accounting Standards Codification (the Codification) became the source of authoritative US GAAP recognized by the FASB to be applied by nongovernmental entities.

All of the Codifications

content carries the same level of authority, and the US GAAP hierarchy will be modified to include only two levels:

authoritative and nonauthoritative.

Topic 105 was effective for the Company as of July 1, 2009 and did not have a material

effect on its consolidated financial statements.

In June 2009, the FASB issued a new accounting standard which provides

amendments to previous guidance on the consolidation of variable interest entities.

This standard clarifies the characteristics that identify a variable interest entity (VIE) and changes how a reporting entity identifies a primary

beneficiary that would consolidate the VIE from a quantitative risk and rewards calculation to a qualitative approach based on which variable interest holder has controlling financial interest and the ability to direct the most significant

activities that impact the VIEs economic performance.

This standard requires the primary beneficiary assessment to be performed on a continuous basis.

It also requires additional disclosures about an entitys involvement with a

VIE, restrictions on the VIEs assets and liabilities that are included in the reporting entitys consolidated balance sheet, significant risk exposures due to the entitys involvement with the VIE, and how its involvement with a VIE

impacts the reporting entitys consolidated financial statements.

The standard was effective for the Company as of January 1, 2010 and did not have a material effect on its consolidated financial statements.

In August 2009, the FASB issued ASU 2009-05 (previously exposed for comments as proposed FSP FAS 157-f) to provide guidance on measuring the

fair value of liabilities under ASC Topic 820 Fair Value Measurements and Disclosures .

ASU 2009-05 clarifies that the quoted price for the identical liability, when traded as an asset in an active market, is also a Level 1 measurement for

that liability when no adjustment to the quoted price is required.

In the absence of a Level 1 measurement, an entity must use certain valuation techniques to estimate fair value.

ASU 2009-05 was effective for the Company on October 1, 2009 and

did not have a material effect on its consolidated financial statements.

In October 2009, the FASB issued an update to

existing guidance on revenue recognition for arrangements with multiple deliverables.

This update will allow companies to allocate consideration received for qualified separate deliverables using estimated selling price for both delivered and

undelivered items when vendor-specific objective evidence or third-party evidence is unavailable.

Additional disclosures discussing the nature of multiple

element arrangements, the types of deliverables under the arrangements, the general timing of their delivery, and significant factors and estimates used to determine estimated selling prices are

This update is effective for the Company beginning January 1, 2011 and is not expected to have a material impact on the Companys consolidated financial statements.

On April 17, 2008, UTEK purchased all of the shares of Carmi, Inc., a 100% owned subsidiary of Strategos, LLC,

wherein Carmi, Inc.

became a subsidiary of UTEK.

is being dissolved and all operations are included as a unit of UTEK, which is doing business as and is referred to as Strategos throughout this Form 10-K.

The financial results of Strategos

have been included in our consolidated financial statements from April 17, 2008.

Preliminary Purchase Price

Strategos was acquired for potentially 1,248,960 shares of UTEK unregistered common stock valued at $15 million as of the acquisition date.

terms of the acquisition agreement, Strategos stockholders were entitled to 502,970 shares of UTEK unregistered common stock valued at approximately $6,041,000 as of the acquisition date.

In addition, Strategos stockholders are eligible to receive

an additional 745,990 shares of UTEK unregistered common stock, which are being held in escrow, pursuant to meeting specific revenue targets for 2008 and 2009 (contingency shares).

The Company recorded a contingent liability of

approximately $1,952,000 with respect to the contingency shares, which reflected the amount of the fair value of the assets acquired in excess of the cost.

When the contingency is resolved and the consideration is issued or becomes issuable, any

excess of the fair value of the contingent consideration issued or issuable over the amount that was recognized as if it was a liability will be recognized as an additional cost of the acquisition.

As of December 31,

2008, 329,670 contingency shares, with a value of approximately $3,959,000, were issued and earned and were recognized as an additional cost of the

This also resulted in a reduction of the contingent liability balance to zero.

Preliminary Purchase Price Allocation

Pursuant to our business combinations accounting policy, the total purchase price for Strategos was allocated to the net tangible

assets and intangible assets acquired based upon their estimated fair values as of April 17, 2008.

The excess of the net tangible assets and intangible assets acquired over the purchase price resulted in a contingent liability.

The contingent

liability was subsequently eliminated in connection with the earnout of contingency shares in the second and third quarters of 2008.

This earnout reduced the contingent liability by $1,952,000 and increased goodwill by $2,007,000.

The preliminary

allocation of the purchase price was based upon the preliminary purchase price, which is subject to change based on the earnout of the contingency shares through December 2009.

Our preliminary purchase price allocation as of December 31, 2008

is as follows:

Accounts receivable

Other tangible assets

Intangible assets

Accounts payable and other liabilities

Contractual obligations on contracts

Deferred tax liability

Total preliminary purchase price

Intangible Assets

The following table sets forth the preliminary components of intangible assets associated with the Strategos acquisition:

Trade names/trademarks/websites

Proprietary processes/know-how

DiscoverySpace software platform

Non-compete agreements

Customer list

Total intangible assets

Social Technologies Group, Inc.

On October 10, 2008, UTEK purchased 100% of Social Technologies Group, Inc.

(Social Technologies).

The financial results of Social

Technologies have been included in our consolidated financial statements from October 10, 2008.

Preliminary Purchase Price

Social Technologies was acquired for potentially 998,027 shares of UTEK unregistered common stock valued at $10,177,000 as of the acquisition date.

Under the terms of the acquisition agreement, Social Technologies stockholders were entitled to 499,014 shares of UTEK unregistered common stock valued at

is being dissolved and all operations are included as a unit of UTEK, which is doing business as and is referred to as Strategos throughout these financial statements.

financial results of Strategos have been included in the Companys consolidated financial statements from April 17, 2008.

The total purchase price for Strategos was $11.4 million, which consisted of 1,094,084 shares of UTEK unregistered common stock.

Strategos stockholders were entitled to 502,970 shares of UTEK unregistered common stock valued at

approximately $6,041,000 as of the acquisition date.

In addition, Social Technologies stockholders are eligible to receive an additional 499,013 shares of

UTEK unregistered common stock, which are being held in escrow, pursuant to meeting specific revenue targets for the three years following the closing.

Preliminary Purchase Price Allocation

Pursuant to our business combinations accounting policy, the total purchase

price for Social Technologies was allocated to the net tangible assets and intangible assets acquired based upon their estimated fair values as of October 10, 2008, as set forth below.

The preliminary allocation of the purchase price was based

upon the preliminary purchase price, which is subject to change based on the earnout of the contingency shares through October 2011.

Our preliminary purchase price allocation as of December 31, 2008 is as follows:

Accounts receivable

Other tangible assets

Intangible assets

Accounts payable and other liabilities

Contractual obligations on contracts

Notes payable and other debt

Deferred tax liability

Total preliminary purchase price

Intangible Assets

The following table sets forth the preliminary components of intangible assets associated with the Social Technologies acquisition:

Trade names/domain names/websites

Proprietary software/processes/know-how

Non-compete agreements

Customer list

Total intangible assets

Other 2008 Acquisitions

On December 20, 2007, the Company entered into a stock purchase agreement with Partnering Intelligence Limited and Bridgehead International Limited to acquire Pharmalicensing Limited

In addition, Strategos stockholders received an additional 329,670 and 261,444 shares of UTEK unregistered common stock in 2008 and 2009, respectively, pursuant to having met specific revenue

targets for those years.

In allocating the purchase price based on estimated fair values, the Company recorded approximately $5.8 million of goodwill, $6.4 million of identifiable intangible assets and $(787,000) of net tangible assets.

Social Technologies

October 10, 2008, UTEK purchased 100% of Social Technologies Group, Inc.

(Social Technologies).

The financial results of Social Technologies have been included in the Companys consolidated financial statements from

October 10, 2008.

The total purchase price for Social Technologies was $5.2 million, which consisted of 512,420 shares

of UTEK unregistered common stock.

Social Technologies stockholders were entitled to 499,014 shares of UTEK unregistered common stock valued at approximately $5,088,000 as of the acquisition date.

In addition, Social Technologies stockholders

received an additional 13,406 shares of UTEK unregistered common stock in 2009 pursuant to having met specific revenue targets for that year.

In allocating the purchase price based on estimated fair values, we recorded approximately $5.7 million of

goodwill, $2.2 million of identifiable intangible assets and $(2.7 million) of net tangible assets.

Pharmalicensing

The transaction closed and became effective on January 3, 2008, at which time the Company issued 153,967 shares of unregistered UTEK common stock, valued at $2,150,000, to Partnering Intelligence in consideration

for all of the shares of Pharmalicensing owned by Partnering Intelligence.

The value of the shares was based on the average ten-day closing price prior to execution of the stock purchase agreement.

The shares acquired represent 100% of the issued

and outstanding shares of Pharmalicensing.

The Company acquired the shares of Pharmalicensing through its subsidiary UTEK Europe, Ltd.

Transfer of the 153,967 shares of UTEK common stock is restricted for twelve months following the completion of

the transaction.

The financial results of Pharmalicensing have been included in our consolidated financial statements from January 3, 2008.

On December 20, 2007, the Company entered into a stock purchase agreement with Partnering Intelligence Limited and Bridgehead

International Limited to acquire Pharmalicensing Limited (Pharmalicensing).

The transaction closed and became effective on January 3, 2008, at which time the Company issued 153,967 shares of unregistered UTEK common stock, valued at

$2.15 million, to Partnering Intelligence in consideration for all of the shares of Pharmalicensing owned by Partnering Intelligence.

In allocating the purchase price based on estimated fair values, we recorded approximately $1.5 million of

goodwill, $858,000 of identifiable intangible assets and $(235,000) of net tangible assets.

The financial results of Pharmalicensing have been included in the Companys consolidated financial statements from January 3, 2008.

On July 3, 2008, the Company entered into a stock purchase agreement to acquire 100% of Innovaro Limited (Innovaro), a company incorporated in the United Kingdom and Wales.

Innovaro was acquired for potentially 691,714

shares of UTEK unregistered common stock valued at approximately $7,329,000 as of such

The number of shares is based on the average twenty-day closing price prior to execution of the stock purchase agreement.

Under the terms of the

agreement, Innovaro stockholders received one half, or 345,857, of the UTEK shares worth approximately $3,664,000 at closing.

Transfer of the 345,857 UTEK unregistered shares is restricted for at least 12 months following the close of the

The remaining UTEK shares are held in escrow, to be released in three installments, 12, 24 and 36 months after closing.

Delivery of the escrowed shares to Innovaro is dependent on the achievement of specific revenue targets for the

three years following the closing.

If such targets are not met, a portion of the escrowed shares will be returned to UTEK.

The cost of these contingent shares will be accounted for as an additional element of the purchase price when and if the

shares are earned.

As of December 31, 2008, 6,131 contingency shares, with a value of approximately $65,000, were earned and were recognized as an additional cost of the acquisition.

The financial results of Innovaro have been included in our

consolidated financial statements from July 3, 2008.

A summary of these acquisitions as of December 31, 2008 are as follows:

Pharmalicensing

Tangible assets acquired

Intangible assets acquired

Goodwill acquired

Foreign currency translation adjustment

Accounts payable and other liabilities assumed

Total preliminary purchase price

The financial

results of Innovaro have been included in the Companys consolidated financial statements from July 3, 2008.

total purchase price for Innovaro was $3.8 million, which consisted of 356,962 shares of UTEK unregistered common stock.

Innovaro stockholders were entitled to 345,857 shares of UTEK unregistered common stock valued at approximately $3,664,000 as of

the acquisition date.

In addition, Innovaro stockholders received an additional 6,131 and 4,974 shares of UTEK unregistered common stock in 2008 and 2009, respectively, pursuant to having met specific revenue targets for those years.

In allocating

the purchase price based on estimated fair values, we recorded approximately $1.7 million of goodwill, $3.0 million of identifiable intangible assets and $(915,000) of net tangible assets.

Unaudited Pro Forma Financial Information

The unaudited financial information in the table below summarizes the combined results of operations of Strategos, Social Technologies, Innovaro and

Pharmalicensing acquired during fiscal 2008, on a pro forma basis, as though the companies had been combined as of the beginning of fiscal 2007.

The pro forma financial information is presented for informational purposes only and is not indicative

of the results of operations that would have been achieved if the acquisitions had taken place at the beginning of each of the periods presented.

The pro forma financial information for all periods presented also includes the business combination

accounting effects on the historical companies operating results including the amortization expenses from acquired intangible assets, stock-based compensation charges for stock awards to acquired employees, and related tax effects as though

the companies had been combined as of the beginning of fiscal 2007.

The unaudited pro forma financial information for the year ended

December 31, 2008 combines the historical results of UTEK for the year ended December 31, 2008 and the historical results of Strategos, Social Technologies, Innovaro and Pharmalicensing for the year ended December 31, 2008, and the

pro forma adjustments discussed above.

The unaudited pro forma financial information for the year ended December 31, 2007 combines the historical results of UTEK for the year ended December 31, 2007 and the historical results of Strategos,

Social Technologies, Innovaro and Pharmalicensing for the year ended December 31, 2007, and the pro forma adjustments discussed above.

The unaudited financial information in the table below summarizes the combined results of operations of Strategos, Social Technologies, Innovaro and Pharmalicensing acquired during fiscal 2008, on a pro

forma basis, as though the companies had been combined as of the beginning of fiscal 2007.

The pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been

achieved if the acquisitions had taken place at the beginning of each of the periods presented.

The pro forma financial information for all periods presented also includes the business combination accounting effects on the historical companies

operating results including the amortization expenses from acquired intangible assets, stock-based compensation charges for stock awards to acquired employees, and related tax effects as though the companies had been combined as of the beginning of

The unaudited pro forma financial information for the year ended December 31, 2008 combines the historical

results of UTEK for the year ended December 31, 2008 and the historical results of Strategos, Social Technologies, Innovaro and Pharmalicensing for the year ended December 31, 2008, and the pro forma adjustments discussed above.

unaudited pro forma financial information for the year ended December 31, 2007 combines the historical results of UTEK for the year ended December 31, 2007 and the historical results of Strategos, Social Technologies, Innovaro and

Pharmalicensing for the year ended December 31, 2007, and the pro forma adjustments discussed above.

Year Ended Dec 31,

2 unchanged sentences

Basic and diluted net decrease in net assets from operations per share

Under Investment Company Accounting

Through September 30, 2009, the Company was operating as an investment company under the 1940 Act and accounted for investments in accordance with Investment Company Accounting.

Investments at December 31, 2008 were valued at fair value as determined by the Board of Directors, with the assistance of appraisals

provided by an independent valuation service provider, in the absence of readily available market values.

The values assigned to these securities were based upon available information and may not reflect amounts that ultimately have been or may be

Accordingly, the fair values included in the accompanying schedule of investments as of December 31, 2008 may differ from the values that would have been used had a ready market existed for these securities and such differences could

In connection with the Companys plan to de-elect BDC status, the Company liquidated a

significant portion of its investment portfolio during 2009.

The Company sold some or all of its shares in a significant number of its investments for $3.1 million in cash and other assets, which included $1.1 million in cash, $218,000 in common

stock, $201,000 in an additional investment in UTEK Real Estate Holdings, Inc., and a $1.5 million note receivable.

In connection therewith, the Company recognized realized losses of $49.6 million and unrealized appreciation of $44.3 million, which

is primarily related to the reversal of previously recorded unrealized depreciation upon the sale of these investments, for the nine months ended September 30, 2009.

Under Operating Company Accounting

The Company began reporting as an

operating company on October 1, 2009.

In connection therewith, the Company modified the accounting treatment for it investments to conform to US GAAP for operating companies.

See Note 1 for further discussion of the Companys

withdrawal of its election to be treated as an investment company under the 1940 Act and the effects on the Companys financial statements.

Available-for-Sale Securities

As of October 1, 2009, the Company classifies its investments in

freely tradable equity securities as available-for-sale in accordance with US GAAP and its intentions regarding these instruments.

A summary of the estimated fair value of available-for-sale securities is as follows as of December 31,

Unrealized(1)

Equity securities

Available-for-Sale Securities

The total of the unrealized gains and losses of $(70,946) is included in operating company equity as a component of accumulated other comprehensive income (loss) in the

consolidated balance sheet.

As of December 31, 2009, five of our nine total available-for-sale securities

were in an unrealized loss position, all of which were for a period of less than twelve months.

These securities are in micro-cap companies in various industries and the impairment is significant as it relates to three of the five investments.

all cases, the impairment is deemed to have been caused by general market fluctuations.

Based on third-party valuations, the Company believes these impairments are not other-than-temporary.

Accordingly, no impairment loss has been recognized on

these securities.

Proceeds from the sale of available-for-sale securities for the three months ended December 31, 2009

were approximately $453,000.

Gross realized gains (losses) were approximately $20,000 for the three months ended December 31, 2009.

Fair Value Hierarchy

The Company values substantially all of its investments at fair value as determined in

good faith by the Board of Directors in accordance with the Companys valuation policy, the provisions of the 1940 Act and US GAAP through September 30, 2009.

Subsequent to October 1, 2009, the Company values its investments in

certificates of deposits and available-for-sale securities and its derivative liability at fair value in accordance with US GAAP.

US GAAP establishes a fair value hierarchy that encourages and is based on the use of observable inputs, but

allows for unobservable inputs when observable inputs do not exist.

When there are multiple inputs for determining the fair value of an investment, the Company classifies the investment in the fair value hierarchy based on the lowest level input

that is significant to the fair value measurement.

Inputs are classified into one of three categories:

Level 1Unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2Quoted prices in active markets for similar assets or liabilities, or quoted prices for identical or similar assets or liabilities in

markets that are not active, or inputs other than quoted prices that are observable for the asset or liability.

Level 3Unobservable inputs for the asset of liability.

Assets measured at fair value on a recurring basis by level within the fair value hierarchy at December 31, 2009 and 2008, were as

Fair Value Measurements at Reporting Date Using

Quoted Prices in Active

Markets for Identical

Assets (Level 1)

Significant Other

Observable Inputs

Unobservable Inputs

Certificates of deposit at

Available-for-sale securities at 12/31/09

Derivative liability at

Total investments at

Companys investments are classified within Level 2 of the fair value hierarchy.

Our equity interests in companies for which there is no liquid public market are valued using quoted market prices for identical or similar instruments in markets

that are not active.

The determined values are generally discounted to account for the illiquid nature of the investment and minority ownership positions.

The value of our equity interests in public companies for which market quotations are readily

available is based on quoted market prices for similar instruments in an active market.

These securities are generally thinly traded and/or carry discounts from the public market value for certain restrictions on resale.

The Company utilizes the

assistance of an independent valuation firm in determining these values.

The Companys derivative liability is

classified within Level 2 of the fair value hierarchy.

The Company utilizes the Black-Scholes Option Pricing Model to value the derivative liability utilizing observable inputs such as the Companys common stock price, the exercise price of the

warrants, and expected volatility, which is based on historical volatility.

Fixed assets consist of the following:

2 unchanged sentences

Leasehold Improvements

Building Improvements

Accumulated Depreciation

1 unchanged sentence

December 31, 2009, 2008, and 2007, respectively.

The Company determined there was an impairment of the goodwill related to the Pharma Transfer, Ltd.

acquisition and an impairment of the goodwill related to the Knowledge Express acquisition in 2007.

As a result, the

Company recorded a partial impairment of the related goodwill during 2007.

These write-downs resulted in an impairment charge of approximately $159,000 ($99,000 after tax) for the United Kingdom segment and $51,000 ($32,000 after tax) for the United

States segment during 2007.

These impairment charges are included in goodwill impairment in the statement of operations for the year ended December 31, 2007.

The Company decided during 2006 to make significant changes in strategy for UTEK ip , Ltd., primarily switching the focus of operations in Israel from software to technology transfer.

These changes were

other-than-temporary;

therefore management determined there was an impairment of the original purchase goodwill.

The Company recorded a total impairment of the goodwill for UTEK ip (Israel segment) in 2006.

This resulted in a write-down of

approximately $235,000 ($147,000 after tax), which is included in goodwill impairment in the statement of operations for the year ended December 31, 2006.

The changes in the carrying amount of goodwill, which is generally not deductible for tax purposes, by reporting unit for the year ended December 31, 2008 were as follows:

Knowledge Express purchase

Pharma-Transfer purchase

EKMS purchase

UTEK-Europe purchase

Pharmalicensing purchase

Strategos purchase & earnout

Innovaro purchase & earnout

Social Technologies purchase

Currency exchange

Intangible Assets

During 2006, the Company decided to make significant changes in strategy for UTEK ip , Ltd., primarily switching the focus of operations in Israel from software to technology transfer, the Companys core

In connection therewith, the Company ceased operation of the UTEK ip website as of year-end and wrote-off the remaining carrying value of the related intangible asset.

In addition, the Company ceased operation of the UTEK-EKMS

website during 2006 as a result of duplication of website contents with other UTEK websites and the Company wrote-off the remaining carrying value of the related intangible asset.

These write-offs resulted in an impairment charge of approximately

$51,000 ($32,000 after tax) for the Israel segment and $16,000 ($9,000 after tax) for the United States segment during 2006.

Impairment charges are included in general and administrative expenses in the statement of operations for the year ended

December 31, 2006.

The Company believes that no additional impairment of intangible assets exists at December 31, 2008.

changes in intangible assets for the year ended December 31, 2008 were as follows:

Goodwill and Intangible Assets

In accordance with US GAAP, goodwill is not subject to amortization.

Goodwill and indefinite-lived assets are reviewed for impairment by

applying a fair value based test on an annual basis or more frequently if circumstances indicate impairment may have occurred.

The Company assesses goodwill for impairment by comparing the carrying value of its reporting units to their respective

fair values and reviewing the Companys market value of invested capital.

Management engages an independent valuation firm to assist in its impairment assessment reviews.

The Company determines the fair value of its reporting units primarily by

comparing the reporting unit to similar business ownership interests that have been sold.

The Company also uses comparative price-to-book multiples and other factors to corroborate the reasonableness of the conclusion.

As a result of significant declines in revenues related to its futures and foresight projects, management determined that there was possible

goodwill and intangible asset impairment for our Social Technologies division (innovation consulting segment).

Therefore, interim impairment testing was performed as of June 30, 2009.

The state of the economy early in 2009 contributed to

potential Social Technologies clients focusing on short-term survival rather than long-term foresight planning.

As a result, management terminated the majority of this divisions employees in favor of an independent, network-based

approach in an effort to reduce overhead.

Management concluded that this division suffered a significant adverse change in the business, which included a projection of continuing operating and cash flow losses.

The Company determined that there was

impairment of this divisions purchased intangible assets of $1.0 million and impairment of the divisions goodwill of $1.3 million.

This impairment loss is included in the Companys consolidated statement of operations for the nine

months ended September 30, 2009.

Based on the annual impairment analysis completed with the assistance of an independent valuation firm, the Company determined that no additional impairment exists at December 31, 2009.

In connection with our annual impairment analysis in 2007, we determined there was impairment of the goodwill related to the Pharma

Transfer, Ltd.

and Knowledge Express acquisitions.

As a result, we recorded a partial impairment of the related goodwill during 2007.

These write-downs resulted in an impairment charge of approximately $159,000 ($99,000 after tax) for the United

Kingdom segment and $51,000 ($32,000 after tax) for the United States segment during 2007.

This impairment loss is included in the Companys consolidated statement of operations for the year ended December 31, 2007.

The following table presents goodwill and intangible assets as of December 31, 2009 and 2008.

Amortizable intangible assets:

Trade names/trademarks/ websites

2 unchanged sentences

Customer list

Currency exchange

Accumulated amortization

The weighted average useful life for $756,821 of the trade names/trademarks/websites is 5.9 years and the remaining $3,073,525 has a weighted average useful life that is indefinite.

Indefinite lived intangible assets are not amortized for GAAP purposes.

Intangible assets are being amortized over the

estimated useful lives of the respective assets, which range between three and twelve years.

Total amortization expense related to intangible assets was approximately $929,500, $66,000 and $90,000 for the years ended December 31, 2008, 2007 and

2006, respectively.

The estimated aggregate future amortization expense related to our intangible assets with finite lives is as follows:

For the twelve months

Total amortizable intangible assets, net

Infinite-lived intangible assets:

Total intangible assets, net

The changes to the net carrying value of goodwill by

product segment for the years ended December 31, 2009 and 2008 are as follows:

Balance as of December 31, 2007

Increases due to acquisitions and earnouts

Translation adjustment

Balance as of December 31, 2008

Increases due to acquisitions and earnouts

Translation adjustment

Balance as of December 31, 2009

The changes to the net carrying value of intangible assets by product segment for the years

ended December 31, 2009 and 2008 are as follows:

Balance as of December 31, 2007

Increases due to acquisitions and earnouts

Translation adjustment

Balance as of December 31, 2008

Increases due to acquisitions and earnouts

Translation adjustment

Balance as of December 31, 2009

Finite-lived intangible assets are being amortized over the estimated useful lives of the respective assets,

which range between three and twelve years.

Total amortization expense related to intangible assets was approximately $1,401,000, $929,500 and $66,000 for the years ended December 31, 2009, 2008 and 2007, respectively.

The estimated aggregate future amortization expense related to the Companys intangible assets with finite lives is as follows:

For the years

ending December 31,

Notes Payable and Other Debt

The Company had the following notes payable and other debt at December 31, 2008:

Long-term Debt

The Company had the following long-term debt at December 31, 2009:

$3,000,000 note payable, bank, due in monthly installments of $20,436 including principal and interest at 6.50% through

April 1, 2013 with a balloon payment due on May 1, 2013;

collateralized by the Companys corporate office building and related land

$1,750,000 note payable, due in quarterly installments of interest in arrears at 8.00% with principal due in full on

October 22, 2013;

less applicable debt discount (discussed below);

collateralized by a security interest in 68% of one of the Companys subsidiaries, which owns undeveloped land in Hernando County, Florida

$1,500,000 note payable, due in monthly installments of interest at 5.25% with principal due in full on October 1, 2015;

collateralized by undeveloped land in Hillsborough County, Florida

$600,000 note payable, bank, due in monthly installments of $14,420 including principal and interest at 7.09% through November

Capital leases on computer equipment, due in monthly installments of $6,053 expiring through July 2010, imputed interest rates of between 7.0%

$75,000 bank credit card financing, due in monthly installments of interest at 11.99%

$450,000 bank revolving line of credit, due in monthly installments of interest at 5.25%;

collateralized by certificates of

Capital leases on computer equipment, due in monthly installments of up to $6,053 expiring through July 2010, imputed interest

rates of between 7.0% and 13.0%

Insurance financing, due in monthly installments of $9,711 including principal and interest at 5.83% through September

$75,000 bank credit card financing, due in monthly installments of interest at 11.99%

1 unchanged sentence

$25,000 bank credit card financing, due in monthly installments of interest at 7.0%

The above debt has no covenants or guarantees and is collateralized by certain of the

Companys assets.

Payments required for the next five years on the notes payable and other debt balance as of December 31, 2008

are as follows:

Total long-term debt

Less current maturities

Non current portion

Payments required for the next five years on the

long-term debt balance as of December 31, 2009 are as follows:

For the years ending December 31,

Less imputed interest on capital lease obligations

Amortization expense related to capitalized leases is included in amortization and depreciation

expense and was approximately $4,000 for the year ended December 31, 2008.

Accumulated depreciation related to computer equipment under capital lease obligations was approximately $7,000 at December 31, 2008.

This amortized

depreciation expense relates to approximately $140,000 of equipment purchased under capital lease agreements, all of which is still under capital lease at December 31, 2008.

The Company accounts for income taxes under Statement of Financial Accounting

Standards No.

109 (SFAS 109), Accounting for Income Taxes .

Deferred income tax assets and liabilities are determined based upon differences between financial reporting and tax basis of assets and liabilities and are measured

using the enacted tax rates and laws that will be in effect when the differences are expected to reverse.

The components of the income tax provision on operations, excluding income tax expense (benefit) on

realized gains (losses) and unrealized appreciation (depreciation) of investments are as follows:

Amortization expense related to capitalized leases was approximately $27,000 and $4,000 for the years ended

December 31, 2009 and 2008, respectively.

Accumulated depreciation related to computer equipment under capital lease obligations was approximately $32,000 and $7,000 at December 31, 2009 and 2008, respectively.

This depreciation

expense relates to approximately $140,000 of equipment purchased under capital lease agreements, of which $125,000 is still under capital lease at December 31, 2009.

Note and Warrant Purchase Agreement

On October 22, 2009, the Company entered into a Note and Warrant Purchase Agreement (the Purchase Agreement) with Gators

Lender, LLC (the Lender), pursuant to which the Company borrowed $1,750,000 from the Lender.

In connection with this transaction, the Company issued a Promissory Note (the Note) to the Lender in the principal amount of

UTEK Real Estate is a co-borrower under the Note.

Pursuant to an Absolute Guaranty of Payment and Performance,

this loan is guaranteed by all of the Companys subsidiaries, including newly formed subsidiaries.

In addition, this guaranty was secured pursuant to a Mortgage and Security Agreement encumbering vacant real property located in Hernando County,

Florida (the Collateral), which is owned by Cortez 114, LLC (Cortez), a subsidiary of UTEK Real Estate.

Pursuant to a February 26, 2010, Substitution of Collateral Agreement and a Membership Interest Pledge Agreement and Release of Mortgage, the Lenders security interest in the Collateral was released and replaced by a security

interest in 68 Units, constituting 68% of the outstanding membership interests of Cortez.

The Note was amended and restated to provide that UTEK and UTEK Real Estate must pay down $500,000 of the indebtedness to the Lender within 60 days.

Interest is payable on the outstanding principal amount of the Note at an annual rate of 8.00%.

Interest is payable on a

quarterly basis, in arrears, beginning April 15, 2010.

The entire principal amount outstanding and all accrued interest is payable in full no later than October 22, 2012.

The entire principal amount outstanding may be repaid earlier at the

discretion of the Company, subject to certain prepayment penalties.

The Note also includes customary event of default provisions, including the failure to make timely payments, material misrepresentations, change of control of the Company, defaults

on other obligations in excess of $100,000, the grant of a senior security interest on the property securing this loan, the liquidation of the Company, bankruptcy and certain judicial judgments.

As additional consideration for this loan, the Company also entered into a Warrant Agreement with the Lender to allow the Lender to purchase

up to 437,500 shares of the Companys common stock at any time until October 22, 2014 at an exercise price of $4.48 per share.

The exercise price is subject to certain conditions and adjustments that make the exercise price variable prior

to the issuance of the Companys common stock pursuant to the Warrant Agreement.

The Company determined that the

embedded feature (ratchet down of exercise price) in the warrants is not indexed to the Companys own stock due to the variability in the exercise price of the warrants and, therefore, is an embedded derivative financial liability, which

requires bifurcation and to be separately accounted for pursuant to US GAAP.

The Company uses the Black-Scholes option pricing model to estimate the fair value of the derivative instrument, for which we employed certain assumptions as follows:

expected dividend yield is based on the current historical yield of 0%.

The expected volatility is based on historical volatility for a period equal to the expected life of the warrants of 39%.

The risk-free interest rate is based on the US Treasury

yield curve in effect of 2.39% at Oct 22, 2009 and 2.69% at Dec 31, 2009.

The expected term of the warrants is based on the contractual term of the warrants and expectations of the warrants holders behavior of 5 years from inception.

model also uses the current market price of the Companys common stock and the exercise price of the warrants in the fair value calculation.

The Company determined the value of the derivative instrument to be $554,972 upon issuance of the warrants and recorded a debt discount and offsetting derivative liability.

The debt discount is being

amortized over the life of the debt, which is three years.

The Company recorded interest expense of $35,478 related to the amortization of debt discount for the three months ended December 31, 2009.

The derivative liability is required to be

revalued to fair value at the end of each quarter and the value is adjusted accordingly.

The Company recorded a loss on derivative liability of $110,000 for the three months ended December 31, 2009 in connection with adjusting the derivative

liability to fair value.

The following shows the components comprising the carrying value of this note at

December 31, 2009:

Original issue price of note

Original issue discount

Amortization of discount

Carrying value of note

Deferred income tax assets and liabilities are determined based upon differences between financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws

that will be in effect when the differences are expected to reverse.

The components of the income tax provision on

operations, excluding income tax expense (benefit) on realized gains (losses) and unrealized appreciation (depreciation) of investments are as follows:

Year Ended December 31,

A reconciliation of the differences between the effective income tax rate and the statutory

federal tax rate follows:

Provision for income taxes

A reconciliation of the differences between the

effective income tax rate and the statutory federal tax rate follows:

Year Ended December 31,

statutory rate

Tax at US statutory rate

State taxes, net of federal benefit

1 unchanged sentence

Stock options

Amortization of intangible assets

Change in valuation allowance

Significant components of the Companys deferred tax assets and liabilities are as follows:

As of December 31,

Provision for income taxes

Related to the Companys status as an investment

company during the nine months ended September 30, 2009, the Company has changes in unrealized losses and realized losses on investments totaling $64,658,725 and $(69,399,078), respectively.

Additionally, related to the Companys status as

an operating company from October 1, 2009 through December 31, 2009, the Company has unrealized losses on available-for-sale securities

and foreign currency translation adjustments of $70,946 and $(697,682), respectively.

These amounts are included as a component of stockholders equity in the respective periods.

Accordingly, these amounts as tax-effected are included in the Companys valuation allowance, but would not be reflected in the change in the valuation allowance in the accompanying reconciliation of the effective rate to the statutory rate for

Significant components of the Companys deferred tax assets and liabilities as of December 31, 2009 are as

Accrued expenses

Revenue recognition

Subtotal current deferred tax asset

Net operating loss carryforward

Tax credit carryforward

Capital loss carryforward

Intangible assets

Subtotal non-current deferred tax asset

Total deferred tax asset

valuation allowance

Net deferred tax asset (liability)

SFAS 109 requires a valuation allowance to reduce the deferred tax assets reported if, based on

the weight of the evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

During 2008, management determined that it was more likely than not that net operating loss carryforwards in

UTEK would not be utilized in the future and, accordingly, a valuation allowance of $10.8 million was recorded against the related deferred tax

A portion of the valuation allowance ($5.1 million) was recorded as part of the provision for income tax expense and the remaining portion ($5.7 million) is included in the change in unrealized depreciation of investments, which is

shown as a component of equity.

The valuation allowance resulted in a significant additional decrease to our net decrease in net assets from operations and per share values.

Stockholders Equity

Transactions in common stock for the three years ended

December 31, 2008, were as follows:

Balance at December 31, 2005

Stock-based compensation expense

Deferred tax related to stock-based compensation expense

Employee stock options exercised

Private placementFebruary 2006

Acquisition of 22 nd Street of Ybor City,

Balance at December 31, 2006

Stock-based compensation expense

Employee stock options exercised

Balance at December 31, 2007

Employee stock options exercised

Stock-based compensation expense

Acquisition of Pharmalicensing

Acquisition of Strategos

Acquisition of Innovaro

Acquisition of Social Technologies

Strategos earnout accrual

Innovaro earnout accrual

Balance at December 31, 2008

On February 8, 2006, the Company consummated a financing which raised approximately

$10 million (before expenses) from the sale of 816,330 shares of common stock.

Piper Jaffray, & Co.

received an aggregate commission of $702,000.

On March 30, 2006, the Company declared a dividend of $0.02 per share to stockholders of record as of April 28, 2006.

The dividend was paid on May 19, 2006.

The Company also declared a dividend of

$0.02 per share to stockholders of record as of January 8, 2007.

This dividend was paid on January 31, 2007.

June 15, 2007, the Companys stockholders voted to approve an amendment to the Companys Certificate of Incorporation to increase the number of authorized shares of common stock from 19,000,000 to 29,000,000.

The additional 10,000,000

shares are part of the existing class of common stock and will have the same rights and privileges as the shares of common stock currently issued and outstanding.

The Board of Directors deemed it desirable to increase the number of shares of common

stock the Company is authorized to issue in order to provide adequate flexibility in the future.

The holders of common stock are not entitled to preemptive rights or cumulative voting, and accordingly, the issuance of additional common shares will

dilute the ownership and voting rights of shareholders.

See Note 10 for further information on share-based compensation expense and employee stock options

See Note 3 for further information on acquisitions and the earnout accrual.

Net deferred tax liability

Significant components of the Companys deferred tax assets and liabilities as of December 31,

2008 are as follows:

Net operating loss carryforward

Intangible assets

valuation allowance

Net deferred tax liability

US GAAP requires a valuation allowance to reduce the deferred tax assets reported if, based on the

weight of the evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

During 2008, management determined that it was more likely than not that net operating loss carryforwards in UTEK would

not be utilized in the future.

Accordingly, a valuation allowance of $15.8 million and $11.2 million and was recorded for 2009 and 2008, respectively.

At December 31, 2009, the Company had available U.S.

net operating loss carryforwards of approximately $30,011,000, which expire as follows:

2021-$753,000;

2022-$371,000;

2023-$1,645,000;

2024-$69,000;

2025-$3,835,000;

2027-$5,076,000;

2028-$5,423,000;

and 2029-$12,839,000.

Stock-Based Compensation

The Company had two stock-based equity compensation plans at December 31, 2008.

The Company adopted a stock option plan in September 1999 (the

1999 Plan) and a non-qualified stock option plan in February 2000 (the 2000 Plan).

Under the terms of the 1999 Plan, as amended, the Company is authorized to issue options to purchase up to 1,985,000 shares of the

Companys common stock.

The options are intended to be incentive stock options within the meaning of Section 422 of the Internal Revenue Code (the Code), however, options may be issued under the 1999 Plan, as amended, that do

not qualify for incentive treatment under the Code.

Under the terms of the 2000 Plan, the Company is authorized to issue options to purchase up to 315,000 shares of the Companys common stock.

Under the 2000 Plan, as amended, the Company may

only issue options that do not qualify for incentive treatment under Section 422 of the Code.

Options, under both plans, are granted at the fair market value of the stock on the date of grant, except in the case of a more than 10% shareholder

for which grants are exercisable at 110% of fair market value of the stock on the date of grant.

Options generally become fully vested three to four years from the date of grant and expire five years from the date of grant.

At December 31,

2008, the Company had 1,281,813 shares available for future stock option grants under existing plans.

The Company accounts for stock

option grants in accordance with the provisions of Statement of Financial Accounting Standards No.

123(R) (SFAS 123(R)), Share-Based Payment .

Under the modified prospective approach of SFAS 123(R), compensation cost

recognized during the years ended December 30, 2008, 2007 and 2006 includes compensation cost for all share-based payments granted prior to, but not yet vested as of January 1, 2006, based on the grant date fair value estimated in

accordance with the original provisions of SFAS 123, and compensation cost for all share-based payments granted subsequent to January 1, 2006, based on the grant date fair value estimated in accordance with the provisions of SFAS 123(R).

We use the Black-Scholes option pricing model to estimate the fair value of stock-based awards on the date of grant.

The assumptions

employed in the calculation of the fair value of share-based compensation expense were calculated as follows for all years presented:

The Company has two stock-based equity compensation plans at December 31, 2009.

The Company adopted a stock option plan in September

1999 (the 1999 Plan) and a non-qualified stock option plan in February 2000 (the 2000 Plan).

Under the terms of the 1999 Plan, as amended, the Company is authorized to

issue options to purchase up to 2,211,274 shares of the Companys common stock.

The options are intended to be incentive stock options within the meaning of Section 422 of the Internal

Revenue Code (the Code), however, options may be issued under the 1999 Plan, as amended, that do not qualify for incentive treatment under the Code.

Under the terms of the 2000 Plan, the Company is authorized to issue options to purchase

up to 315,000 shares of the Companys common stock.

Under the 2000 Plan, as amended, the Company may only issue options that do not qualify for incentive treatment under Section 422 of the Code.

Options, under both plans, are granted at

the fair market value of the stock on the date of grant, except in the case of a more than 10% shareholder for which grants are exercisable at 110% of fair market value of the stock on the date of grant.

Options generally become fully vested three

to four years from the date of grant and expire five to seven years from the date of grant.

At December 31, 2009, the Company had 1,194,837 shares available for future stock option grants under existing plans.

Stock-based compensation cost recognized during the years ended December 31, 2009, 2008 and 2007 includes compensation cost for all

share-based payments granted prior to, but not yet vested as of January 1, 2006 and compensation cost for all share-based payments granted subsequent to January 1, 2006, based on their respective grant date fair values estimated in

accordance with US GAAP.

The Company recognizes compensation expense on a straight-line basis over the requisite service period.

The Company estimates forfeitures, both at the grant date as well as throughout the requisite service period, based on

the Companys historical experience and future expectations.

In accordance with US GAAP, the Company is required to

estimate at the grant date the number of share options for which the requisite service is expected to be rendered.

The Company estimated that 80% of the requisite service of its stock options issued from 2006 through 2008 would be rendered.

Management revised its estimate of the forfeiture rate of these options in the second quarter of 2009.

The revision to the forfeiture rate was accounted for as a change in estimate and its cumulative effect of $65,000, a reduction in stock-based

compensation, was recognized in the second quarter of 2009.

In connection with this revision, stock-based compensation for prospective periods will also be reduced by $794,000 over the next 2.75 years.

The Company uses the Black-Scholes option pricing model to estimate the fair value of stock-based awards on the date of grant.

assumptions employed in the calculation of the fair value of share-based compensation expense were calculated as follows for all years presented:

Expected dividend yield based on the Companys historical dividend yield.

Expected volatilitybased on the Companys historical market price at consistent points in a period equal to the expected life of the options.

Risk-free interest ratebased on the U.S.

Treasury yield curve in effect at the time of grant.

Expected life of options2008:

based on the Companys historical life of options exercised;

2007 and 2006:

calculated using the simplified method as

prescribed in Staff Accounting Bulletin No.

107, where the expected life is equal to the sum of the vesting period and the contractual term divided by two.

The following table summarizes the assumptions used to estimate the fair value of stock options granted during the years ended December 31, 2008,

2007 and 2006.

Expected volatility based on the Companys historical market price at consistent points in a period equal to the expected life of the

Risk-free interest rate based on the US Treasury yield curve in effect at the time of grant.

Expected life of options 2008 and 2009:

based on the Companys historical life of options exercised, giving consideration to the

contractual terms of the grants, vesting schedules and expectations of future employee behavior;

calculated using the simplified method as prescribed by US GAAP, where the expected life is equal to the sum of the vesting period and the

contractual term divided by two.

The following table summarizes the assumptions used to estimate the fair

value of stock options granted during the years ended December 31, 2009, 2008 and 2007.

Expected dividend yield

3 unchanged sentences

3.75-3.88 years

3.5-3.75 years

Weighted average grant date fair value

1 unchanged sentence

$543,000 for the years ended December 31, 2009, 2008 and 2007, respectively.

Total compensation cost related to stock options was approximately $780,000, $613,000 and $505,000 for the years ended December 31, 2008, 2007 and 2006, respectively.

tax benefits from the exercise of common stock options and from the recognition of compensation costs were not significant during 2008, 2007 or 2006.

At December 31, 2008, there was $2,425,000 of unrecognized compensation cost related to stock

options which is expected to be recognized over a weighted average period of 3.0 years.

The following table represents stock option

activity as of and for the three years ended December 31, 2008:

Total compensation cost related to stock options was approximately $577,000, $780,000 and $613,000 for the years ended December 31, 2009, 2008 and 2007,

respectively.

The tax benefits from the exercise of common stock options and from the recognition of compensation costs were not significant during 2009, 2008 or 2007.

At December 31, 2009, there was approximately $1,473,000 of unrecognized

compensation cost related to stock options which is expected to be recognized over a weighted average period of 2.6 years.

The following table represents stock option activity as of and for the three years ended December 31, 2009:

Contractual Life

7 unchanged sentences

Options ExercisableDecember 31, 2009

The total grant date fair value of options vested during the years ended December 31, 2008,

2007 and 2006 was approximately $547,000, $434,000 and $469,000, respectively.

The following table summarizes information about

outstanding and exercisable stock options at December 31, 2008:

The total grant date fair value of options vested

during the years ended December 31, 2009, 2008 and 2007 was approximately $544,000, $547,000 and $434,000, respectively.

The following table summarizes information about outstanding and exercisable stock options at December 31, 2009:

Outstanding Options

9 unchanged sentences

$14.02 - $15.90

$18.40 - $22.04

Employee Benefit Plan

In 2003, the Company adopted the UTEK Corporation Simple IRA Plan (the Plan) for employees of the Company and its subsidiaries.

The Plan allows employees who satisfy the service requirements of the

Plan to contribute pre-tax wages to the Plan, subject to legal limits, $10,500 in 2008 with catch up deferrals of an additional $2,000 for participants age 50 and older.

The Company matches 100% of the first 3% of wages contributed by

The Companys matching contributions vest immediately and were approximately $171,000, $74,000 and $72,000 in 2008, 2007 and 2006, respectively.

The Company previously offered the UTEK Corporation Simple IRA Plan (the IRA Plan) to employees of the Company and its

subsidiaries.

The IRA Plan allows employees who satisfy the service requirements of the

IRA Plan to contribute pre-tax wages to the IRA Plan, subject to legal limits, $10,500 in 2008 with catch up deferrals of an additional $2,000 for participants age 50 and older.

Company matched 100% of the first 3% of wages contributed by employees.

The Companys matching contributions vest immediately and were approximately $171,000 and $74,000 for the years ended December 31, 2008 and 2007, respectively.

On February 1, 2009, the Company adopted the UTEK Corporation 401k Plan (the 401k Plan).

The 401k Plan

replaced the IRA Plan for employees of the Company and its subsidiaries.

The 401k Plan allows employees who satisfy the service requirements of the 401k Plan, which include being 21 years of age and having three months of service, to contribute

pre-tax wages to the 401k Plan, subject to legal limits.

The Company matches 100% of the first 3%, and 50% of the second 2%, of compensation contributed by employees.

The Companys contributions vest immediately and were approximately $170,000

during the year ended December 31, 2009.

Segment Reporting

The Companys principal area of activity is providing technology transfer

services and supporting innovation consulting services.

The Company has three reportable operating segments:

The Companys principal area of activity is providing technology transfer services and supporting innovation consulting services.

Company has three reportable geographical operating segments:

United Kingdom, Israel and the United States.

The United Kingdom segment includes our wholly owned subsidiary UTEK-Europe, Ltd., the Israel

segment includes our wholly owned subsidiary UTEK ip , Ltd., and the United States segment includes UTEK Corporation.

UTEK ip was closed down in the second quarter of 2008 and all operations of that segment are currently being serviced by

A summary of income from operations (revenue) and other financial information by reportable operating segment is shown

The United Kingdom segment includes the Companys wholly owned subsidiary UTEK-Europe, Ltd., the Israel segment includes the

Companys wholly owned subsidiary UTEK ip , Ltd., and the United States (U.S.) segment includes UTEK Corporation.

UTEK ip was closed down in the second quarter of 2008 and all operations of that segment are currently

being serviced by the US segment.

A summary of revenue and other financial information by reportable geographical operating

segment is shown below:

United Kingdom

7 unchanged sentences

United States

Income from operations (revenues)

Revenue / Income from operations

Income (loss) before income taxes

3 unchanged sentences

United States

Income from operations (revenues)

Revenue / Income from operations

Income (loss) before income taxes

3 unchanged sentences

United States

Income from operations (revenues)

Revenue / Income from operations

Income (loss) before income taxes

Depreciation and amortization

The Company dissolved UTEK ip , which resulted in a gain for the Israel segment and an offsetting loss for the U.S.

segment of approximately $753,000 in 2008.

UTEK ip with the transfer of operations to the U.S.

The Company recorded goodwill impairment for Pharma Transfer, Ltd.

of $159,030 and Knowledge Express of $51,110, which are included in the 2007 loss.

The Company recorded goodwill impairment of $234,940 and intangible asset impairment of $51,000 for UTEK ip , Ltd., which is included in the 2006 loss.

The Company recorded intangible asset impairment of $16,000 for the UTEK-EKMS website, which is included in the 2006 loss.

The Company has recently changed the way it classifies and records its revenues and certain expenses to provide additional information for management.

This change was as a result of the Companys new products and services from the addition of TekScout and the acquisitions of Pharmalicensing, Strategos, Social Technologies and Innovaro.

Consequently, the Company has new product segments for

The Company dissolved UTEK ip , which resulted in a gain for the Israel segment and an offsetting loss for the US segment of approximately $753,000 in 2008.

Company dissolved UTEK ip with the transfer of operations to the US segment.

The Company recognized a $2.4 million impairment loss for the U.S.

segment during 2009.

During 2008, the Company changed the way it classifies and records its revenues and certain

expenses to provide additional information for management.

As a result of the Companys new products and services from the acquisitions of Pharmalicensing, Strategos, Social Technologies and Innovaro, the Company now has product segments for

which certain information can be reported.

These new product segments include:

These reportable product segments include:

technology transfer business;

innovation consulting comprised of the consulting portion of Strategos, Social Technologies and Innovaro businesses;

subscription services

comprised of the Companys information services business;

and all other services comprised of Intellectual Capital Consulting, technology alliance services, and the TekScout business.

The administrative and other column represents miscellaneous

and other income items and general and administrative type expenses that are not allocated amongst the different businesses.

services comprised of the Companys online licensing services business;

and all other services comprised of global technology licensing and other services.

The administrative and other column represents miscellaneous and other income items and

general and administrative type expenses that are not allocated amongst the different businesses.

Management does not analyze assets for decision making purposes as it relates to the segments below.

information is not available for long-lived assets or total assets.

A summary of income from operations and other financial information by

product segment is shown below:

Accordingly, information is not available for

long-lived assets or total assets.

A summary of revenue and other financial information by reportable product segment is

For the Year Ended December 31, 2009

Administrative

Income from operations (revenue)

Revenue / Income from operations

Income (loss) before income taxes

For the Year Ended December 31, 2008

Administrative

Revenue / Income from operations

Income (loss) before income taxes

Commitments and Contingencies

Employment Agreements

On March 10, 2008, UTEK entered into a one year employment agreement,

effective January 1, 2008, with its Chief Executive Officer, Clifford M.

Under the terms of the employment agreement, Dr.

Gross will receive a base salary of $550,000 per year and for each annual period thereafter.

to his base salary, Dr.

Gross will be entitled to:

A reasonable automobile allowance to cover the cost of leasing, insuring and maintaining a vehicle for the duration of the employment agreement, and

Participate in UTEKs executive officer health insurance program.

UTEK will pay all of the premiums related to Dr.

Gross participation in such

The employment agreement provides that if (i) Dr.

Gross is terminated or requested or forced to

resign during the term of the employment agreement, (ii) the employment agreement is not renewed at the end of its term by either party or (iii) UTEK terminates Dr.

Grosss employment for cause or in any way that is a breach of

the employment agreement, then Dr.

Gross shall receive a severance payment equal to the number of years Dr.

Gross has worked for the Company times $100,000 per year, grossed-up to cover any tax liability on such severance

In addition, all stock options held by Dr.

Gross accelerate and become immediately vested, and we will be obligated to file a registration statement with the SEC to register any of our unregistered securities held by Dr.

The employment agreement also provides that in the event of a change of control, Dr.

Gross will be entitled to receive a

one-time bonus equal to twice his annual salary, grossed-up to cover any tax liability on such bonus.

In addition, all stock options held by Dr.

Gross accelerate and become immediately vested upon a change of control, and the

Company will be obligated to file a registration statement with the SEC to register any

of its unregistered securities held by Dr.

A change of control occurs, as defined in the employment agreement, when:

person or group becomes the beneficial owner of more than 30% of our outstanding securities;

(ii) at any time that the board nominated slate of directors is not elected;

(iii) the Company consummates a merger in which it is not the

surviving entity;

or (iv) substantially all of the Companys assets are sold or the stockholders approve the Companys dissolution or liquidation.

The employment agreement obligates the Company to nominate Dr.

Gross to serve as a member of our Board of Directors during the term of the employment agreement.

In consideration of the benefits provided under the employment agreement, Dr.

Gross has agreed to protect UTEKs confidential or secret

information and, during the period of employment and one year thereafter, to not compete with UTEK.

Gross signed an amendment to

this agreement in January 2009, wherein the term of his employment agreement was modified to end on March 1, 2009.

The Company has

various other employment agreements with its executive officers and certain other employees, many of which were entered into in connection with the acquisitions made during 2008.

These agreements provide for $5,423,000 to be paid out over the next 3

Employment Agreements and Severance Liability

retired from his position as the Companys chief executive officer on March 1, 2009, following the conclusion of the term of his employment agreement.

We entered into a

separation agreement with Dr.

Gross on April 8, 2009 that modified the payment terms, but not the monetary obligation amount that Dr.

Gross was entitled to receive pursuant to the employment agreement.

In connection therewith, the

Company issued to Dr.

Gross a $550,000 promissory note that does not bear any interest and is due and payable on March 1, 2010.

Pursuant to the terms of the promissory note, the Company had the option to elect to transfer certain equity

interests in one of its subsidiaries, Cortez 114, LLC (Cortez), which owns real estate located in Hernando County, Florida, to Dr.

Gross in lieu of making the $550,000 cash payment upon maturity of the promissory note.

Subsequent to December 31, 2009, we satisfied our remaining severance obligation to Dr.

Gross through the conveyance of a 32%

ownership interest in Cortez.

In connection with this severance payment, we paid approximately $320,000 to satisfy the related payroll taxes.

The Company has various other employment agreements with its executive officers and certain other employees, some of which were entered into in connection with the acquisitions made by the Company during

Obligations under these employment agreements total $2,546,000 and $1,568,000 for the years ending December 31, 2010 and 2011, respectively.

In addition, certain agreements provide for discretionary bonuses and severance packages.

There are also 150,000 in stock options that are issuable in 2009 under these agreements.

Obligations under these employment agreements total

$2,512,000, $1,862,000, and $1,048,000 for the years ending December 31, 2009, 2010 and 2011, respectively.

Strategos Bonus Plan

In connection with the acquisition of Strategos, the Company implemented the Strategos Bonus

Plan for qualifying Strategos division employees.

The award pool is determined from eligible earnings and aggregate revenues and is limited to the extent required to permit Strategos to maintain sufficient operating cash.

Awards are to be paid out

by December 15 th of each year and are accrued on a quarterly basis.

Approximately 85% to 90% of Strategos net income will be paid out in

are also 25,000 stock options issuable in 2010 under these agreements.

The Company has a Strategos Bonus Plan for qualifying Strategos division employees.

The award pool is determined from

eligible earnings and aggregate revenues and is limited to the extent required to permit Strategos to maintain sufficient operating cash.

Awards are to be paid out by December 15 th of each year and are accrued on a quarterly basis.

Approximately 85% to 90% of Strategos net income will be paid out

in connection with this bonus plan.

The Company recognized bonus expense of approximately $330,000 and $5.9 million in connection with the Strategos Bonus Plan during the years ended December 31, 2009 and 2008, respectively.

The Company has an Innovaro Bonus Plan for qualifying Innovaro division employees.

The award pool is determined from

eligible earnings and aggregate revenues and is limited to the extent required to permit Innovaro to maintain sufficient operating cash.

Awards are to be paid out by June 30 th of each year and are accrued on a quarterly basis.

Approximately 75% to 85% of Innovaro net income will be paid out in

connection with this bonus plan.

The Company paid out approximately $5.9 million in connection with the Strategos Bonus Plan during the year ended December 31, 2008.

There was no accrual in connection with the Strategos Bonus Plan as of

December 31, 2008.

Innovaro Bonus Plan

In connection with the acquisition of Innovaro, the Company implemented the Innovaro Bonus Plan for

qualifying Innovaro division employees.

The award pool is determined from eligible earnings and aggregate revenues and is limited to the extent required to permit Innovaro to maintain sufficient operating cash.

Awards are to be paid out by

June 30 th of each year and are accrued on a quarterly basis.

Approximately 75% to 85% of Innovaro net income will be paid out in connection

with this bonus plan.

There was no bonus in connection with the Innovaro Bonus Plan during the year ended December 31, 2008.

There was no bonus in connection with the Innovaro Bonus Plan during the years ended December 31, 2009 and 2008.

The Company has a Social Technologies Bonus Plan for qualifying Social Technologies division employees.

The award pool is determined from eligible earnings and aggregate revenues and is limited to the

extent required to permit Social Technologies to maintain sufficient operating cash.

The Company recognized bonus expense of $225,000 and $0 in connection with the Social Technologies Bonus Plan for the years ended December 31, 2009 and 2008,

respectively.

Operating Leases

The Company leases its office facilities and certain equipment for various terms under long-term, non-cancelable operating lease

The leases expire at various dates through 2010 and provide for various renewal options.

The Company leases its office facilities and certain equipment for various terms under long-term, non-cancelable operating lease agreements.

The leases expire at various dates through 2013 and provide for

various renewal options.

In the normal course of business, it is expected that these leases will be renewed or replaced by leases on other properties.

The leases provide for

increases in future minimum annual rental payments.

Lease expense charged to operations for the years ended December 31, 2008, 2007, 2006 was approximately $526,000, $317,000 and $277,000, respectively.

The following is a schedule by year of future minimum rental payments required under the operating lease

From time to time, some of the Companys portfolio companies may receive correspondence or other notices of alleged breach of a 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 Companys portfolio companies to cure the alleged breach may have a material adverse impact on the Companys results of operations and financial position.

In May 2008, we obtained a $1,000,000 line of credit with the Bank of Tampa.

The advances on the line of credit accrue interest (payable monthly) at

prime (3.25% as of December 31, 2008).

The principal and any unpaid interest are due upon demand.

This line is collateralized with commercial real estate owned by UTEK Real Estate Holdings, Inc.

There are no borrowings on this line at

December 31, 2008.

The leases provide for increases in future minimum annual rental payments.

Lease expense charged

to operations was approximately $442,000, $526,000 and $317,000 for the years ended December 31, 2009, 2008 and 2007, respectively.

The Company leases the office space for its corporate headquarters from Ybor City Group, Inc., a subsidiary of UTEK Real Estate.

In connection with the consolidation of UTEK Real Estate as of

October 1, 2009, the rent expense associated with this lease is eliminated as an intercompany transaction.

The following

is a schedule by year of future minimum rental payments required under the operating lease agreements:

Related Party Transactions

During the years ended December 31, 2007 and 2006, the Company loaned funds for operations and real estate improvements of approximately $784,000 and $1.2 million, respectively, to certain subsidiaries of UTEK

Real Estate Holdings, Inc., one of UTEKs portfolio companies.

The entire outstanding loan balance of approximately $2 million was repaid to the Company in May 2008.

In addition, the Company leases space for its corporate headquarters from Ybor City Group, Inc., a subsidiary of UTEK Real Estate Holdings, Inc.

The lease agreement has a 36 month term commencing July 1, 2006

through June 30, 2009.

The lease agreement provides for a 3% increase in the minimum monthly rental payment effective on the lease anniversary.

In 2007, the Company took on extra space in the building, which increased the lease payment.

monthly lease payment is $22,440 as December 31, 2008.

During the years ended December 31, 2007 and 2006, the Company loaned funds for operations and real estate improvements to certain

subsidiaries of UTEK Real Estate.

The entire balance of approximately $2 million was repaid to the Company during 2008.

Company leases space for its corporate headquarters from Ybor City Group, Inc., a subsidiary of UTEK Real Estate.

The Company paid rent of approximately $269,000, $344,000 and $258,000 to Ybor City Group, Inc.

during the years ended December 31, 2008, 2007 and 2006, respectively.

during the nine months ended

September 30, 2009 and the years ended December 31, 2008 and 2007, respectively.

In connection with the consolidation of UTEK Real Estate as of October 1, 2009, UTEK

Real Estate and Ybor City Group, Inc.

are no longer related party entities and disclosure of intercompany transactions in not applicable.

Subsequent Events

In February 2009, the Company

sold 95,000 shares of Advanced Medical Isotope Corporation preferred stock in a private sale for $400,000.

The Company accepted the offer to sell the stock to enhance the current cash position in this difficult economic climate with such tight

lending markets.

This sale was not in the normal course of business and therefore did not affect the fair value of the stock as of December 31, 2008.

The Company will recognize an estimated $875,000 capital loss (net of income tax effect) in

connection with the sale of this stock in the first quarter of 2009.

In February 2009, the Company invested an additional $1,700,000 in

UTEK Real Estate Holdings, Inc., one of UTEKs portfolio companies.

This additional investment was made to fund an acquisition Cortez 114, LLC, a real estate holding company that owns approximately 114 acres of real property located in

Brooksville, Florida.

The investment was made with the issuance of 176,470 shares of UTEK unregistered common stock, which is under a lock-up agreement for 12 months following the date of this transaction, and 240,964 common shares of NeoStem, Inc.,

one of UTEKs portfolio companies.

As of the close of business on February 27, 2009, one of the Companys portfolio companies,

Mimedx Group, Inc., had lost approximately 85% of its market value from December 31, 2008.

Following the conclusion of the term of

his employment agreement, on March 1, 2009, Clifford M.

Gross, Ph.D, retired from the position of Chief Executive Officer of the Company.

In addition, Dr.

Gross, who is also the Chairman of our Board of Directors, will not stand for

re-election as a member of our Board of Directors at our 2009 annual meeting of stockholders.

Pursuant to the terms of his employment agreement, Dr.

Gross is entitled to receive a severance payment equal to the number of years

Gross has worked for the Company times $100,000 per year, grossed-up to cover any tax liability on such severance payment.

Gross was employed by the company for 11.5 years.

In connection therewith, the Companys Board of Directors amended and restated UTEKs By-Laws to clarify that the President shall perform the

duties and shall have the powers of the Chief Executive Officer in the event that the Board of Directors has not appointed a Chief Executive Officer.

Selected Quarterly Financial Data (Unaudited)

As of March 16, 2010, we began doing business as Innovaro and changed our ticker

symbol to NYSE Amex:

Our proxy statement for the 2010 Annual Meeting of Shareholders will include a proposal to amend our articles of incorporation to change the corporate name to Innovaro, Inc.

Beginning in March 2010, the Company

will reorganize into three primary business groups, all working under the Innovaro brand:

Strategic Services driven by Strategos, an advanced innovation consultancy;

Technology Marketplaces online platforms, partnering services, global

licensing and technology transfer services;

Insights & Research futures and trends, research, information services and more.

In connection therewith, our business segments will change beginning with our quarterly reporting period

ending March 31, 2010 and this change will require certain reclassifications to prior period financial information.

Quarterly Financial Data (Unaudited)

Fiscal year 2009

Income from operations (Revenue)

Revenue / Income from operations

Net loss from operations

Net loss/ Net decrease in net assets from operations

Net loss per share/ net decrease in net assets from operations per share:

Basic and diluted

Fiscal year 2008

Revenue / Income from operations

Net loss from operations

Net decrease in net assets from operations

Net decrease in net assets from operations per share:

Basic and diluted

Fiscal year 2007

Income from operations (Revenue)

Revenue / Income from operations

Net income (loss) from operations

1 unchanged sentence

Net decrease in net assets from operations per share:

Fiscal year 2006:

Income from operations (Revenue)

Net income from operations

Net increase (decrease) in net assets from operations

Net increase (decrease) in net assets from operations per share:

Selected Per Share Data and Ratios

Basic and diluted

Income from operations for the three months ended March 31, 2009 as shown here varies from the amount previously reported on the Companys March 31, 2009

quarterly report on Form 10-Q of $2,763,721 by $14,294 because of the subsequent reclassification of gains and losses from the disposal of fixed assets out of investment income.

Net loss from operations and net decrease in net assets from operations for the three months ended June 30, 2009 includes an impairment loss of $2.4 million and

severance compensation of $2.5 million.

Net loss from operations and net decrease in net assets from operations for the three months ended March 31, 2008 includes severance compensation of $1.3 million.

Selected Per Share Data and Ratios under Investment Company Accounting

Year Ended December 31

Per share information:(2)

Net asset value, beginning of year

Net asset value, beginning of period

Net income (loss) from operations(2)

2 unchanged sentences

Foreign currency translation adjustment(2)

Distributions to

shareholders(1)

Distributions to shareholders(2)

Net increase from stock transactions(2)

Net asset value, end of year

Per share market value, end of year

Net asset value, end of period

Per share market value, end of period

Investment return, based on market price at end of period(4)

Ratios/supplemental data:

Net assets, end of year

Net assets, end of period

Ratio of expenses to average net assets

Ratio of net income (loss) from operations to average net assets

Diluted weighted average number of shares outstanding during the year

Diluted weighted average number of shares outstanding during the period

Information is presented for the nine months ended September 30 of the current year because the Company ceased operating as an investment company on

October 1, 2009.

As an operating company, measurement of certain items included in this table is not applicable or appropriate.

Therefore, certain items included in this table agree to financial statements included in the Companys

September 30, 2009 quarterly report on Form 10-Q as opposed to financial statements included in this annual report on Form 10-K.

See Note 1 for further discussion of the Companys change in status from an investment company to operating

Calculated based on diluted weighted average number of shares outstanding during the year.

Calculated as a balancing amount necessary to reconcile the change in net assets value per share with the other per share information presented.

This amount may not agree with the

aggregate gains and losses for the period because the difference in the net asset value at the beginning and end of year does not inherently equal the per share changes of the line items disclosed.

Calculated as a balancing amount necessary to reconcile the change in net asset value per share with the other per share information presented.

This amount may not

agree with the aggregate gains and losses for the period because the difference in the net asset value at the beginning and end of year does not inherently equal the per share changes of the line items disclosed.

Calculated as the change in market price during the period divided by the market price at the end of the period.

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data