Exhibit 99.1
FOR IMMEDIATE RELEASE
| Contacts: | ||
| UTEK Corporation (US) | Bankside Consultants (UK) | |
| Tania Bernier | Steve Liebmann or Susan Scott | |
| 813-754-4330 x223 | +44 20-7367-8888 |
UTEK CORPORATION REPORTS RECORD FINANCIAL RESULTS
FOR QUARTER AND NINE MONTHS ENDED SEPTEMBER 30, 2005
Third Quarter 2005 Highlights
| • | Income from Operations (Revenue) increased to $10.4 million during the quarter ended September 30, 2005 vs. $2.0 million during the quarter ended September 30, 2004, a 412% increase |
| • | Net Income from Operations increased to $3.7 million for the three months ended September 30, 2005 from $472 thousand for the three months ended September 30, 2004, a 691% increase |
| • | Net Increase in Net Assets from Operations was $5.7 million during the quarter ended September 30, 2005 vs. a Net Decrease in Net Assets from Operations of $7.2 million during the quarter ended September 30, 2004 |
| • | Net Assets increased to $43.9 million at September 30, 2005 from $23.1 million at December 31, 2004, a 90% increase |
| • | Net Asset Value Per Common Share increased to $5.57 at September 30, 2005 vs. $3.37 at September 30, 2004, a 65% increase |
| • | Six technology transfers were completed during the third quarter of 2005 compared with four transfers completed in the same period of the prior year |
PLANT CITY, FL — November 7, 2005 — UTEK Corporation (AMEX: UTK and LSE-AIM: UTKA) today announced its third quarter and nine months ended 2005 financial results.
Operating Results
Income from operations (revenue) increased 412% to $10.4 million for the three months ended September 30, 2005 from $2.0 million for the three months ended September 30, 2004. Approximately 73% and 87% of income from operations (revenue) was received in the form of equity securities for the three months ended September 30, 2005 and 2004, respectively.
Net income from operations increased 691% to $3.7 million for the three months ended September 30, 2005 from $472 thousand for the three months ended September 30, 2004.
The net increase in net assets from operations (including net income from operations and net realized and unrealized gains and losses on investments) was $5.7 million or $0.74 per diluted common share outstanding for the quarter ended September 30, 2005, versus a decrease of $7.2 million or ($1.28) per diluted common share outstanding for the quarter ended September 30, 2004.
For the nine months ended September 30, 2005, income from operations (revenue) increased 255% to $15.5 million from $4.4 million for same period of the prior year. Approximately 73% and 82% of our income from operations (revenue) was received in the form of equity securities for the nine months ended September 30, 2005 and 2004, respectively.
Net income from operations increased 633% to $3.9 million for the nine months ended September 30, 2005 from $537 thousand for the nine months ended September 30, 2004.
The net increase in net assets from operations for the first nine months of 2005 (including net income from operations and net realized and unrealized gains and losses on investments) was $2.0 million or $0.28 per diluted common share outstanding for the nine months ended September 30, 2005, versus $450 thousand or $0.08 per diluted common share outstanding for the nine months ended September 30, 2004.
Net increase (decrease) in net assets resulting from operations can vary substantially from quarter to quarter primarily due to the changes in sales, unrealized depreciation or appreciation and the recognition of realized gains and losses, which vary from quarter to quarter. As a result, quarterly and other period comparisons of net increases (decreases) in net assets resulting from operations may not be meaningful.
Liquidity and Capital Resources
At September 30, 2005, we had cash and cash equivalents, and short-term investments of $19.3 million, total assets of $48.9 million and net assets of $43.9 million. Our net asset value per common share was $5.57 at September 30, 2005 as compared to $3.85 at December 31, 2004.
Subsequent Events
Subsequent to September 30, 2005, we completed two technology transfers; one to Fuel FX International, Inc. for 3,500,000 unregistered shares of common stock and one to Trio Industries Group, Inc. for 1,213,872 unregistered shares of common stock.
The shares acquired by us in the aforementioned transfers were acquired in tax-free stock-for-stock exchanges and are restricted and may only be resold by us pursuant to the requirements of the Securities Act of 1933. The value of the shares received in connection with such exchanges will be determined based on valuations in accordance with our valuation policy as of the closing date of each transaction.
Our investments in HydroFlo, Inc. and Xethanol Corp. represented 20.5% of Net Assets at September 30, 2005. On November 3, 2005, the $0.24 and $4.00 market closing prices per share of HydroFlo, Inc. and Xethanol Corp., respectively, on the OTC Bulletin Board represented decreases of 70% and 38% from the $0.81 and $6.49 market closing prices per share on September 30, 2005, respectively, which closing prices were used by our board of directors in their determination of the fair value of our investment in these companies at such date. Management estimates that based upon the decline in the market values of HydroFlo, Inc. and Xethanol Corp., our Net Asset value per share would decrease by approximately $0.37 per share or 6.6% from the Net Asset value per share reported in our financial statements at September 30, 2005.
Conference Call at 10:00 a.m. EST on November 7, 2005
UTEK will hold a live conference call on Monday, November 7, 2005 at 10:00 a.m. EST to discuss its third quarter 2005 results. All interested parties are invited to attend the conference call. The dial-in number for US & Canada is 1-888-889-2497. For callers in the UK, please dial 0-800-032-3836. Other international callers, please dial 973-582-2710. Please reference conference ID# 6673809.
UTEK Corporation
Consolidated Statements of Net Assets
September 30, 2005 | December 31, 2004 | |||||||
| (Unaudited) | ||||||||
ASSETS | ||||||||
Investments in non-controlled affiliates (cost $24,438,591 and $18,464,518 at September 30,2005 and December 31, 2004, respectively) | $ | 23,244,853 | $ | 13,965,941 | ||||
Cash and cash equivalents | 3,994,598 | 3,785,873 | ||||||
Short-term investments | 15,282,538 | 5,534,235 | ||||||
Accounts and notes receivable, net of allowance for bad debt | 2,141,255 | 189,888 | ||||||
Prepaid expenses and other assets | 368,476 | 263,203 | ||||||
Fixed assets, net | 299,113 | 410,440 | ||||||
Goodwill | 3,154,059 | 1,517,922 | ||||||
Intangible assets | 369,137 | 212,142 | ||||||
TOTAL ASSETS | $ | 48,854,029 | $ | 25,879,644 | ||||
LIABILITIES | ||||||||
Accrued expenses | 794,509 | 683,272 | ||||||
Deferred revenue | 1,646,832 | 788,888 | ||||||
Deferred income taxes | 2,497,117 | 1,314,541 | ||||||
TOTAL LIABILITIES | 4,938,458 | 2,786,701 | ||||||
NET ASSETS | $ | 43,915,571 | $ | 23,092,943 | ||||
Commitments and Contingencies | ||||||||
Composition of net assets: Common stock, $.01 par value, 19,000,000 shares authorized; 7,888,673 shares issued and outstanding at September 30, 2005, 6,003,163 shares issued and outstanding at December 31, 2004 | $ | 78,887 | $ | 60,032 | ||||
Preferred stock, $.01 par value, 1,000,000 shares authorized; none issued and outstanding | — | — | ||||||
Additional paid-in capital | 39,924,642 | 20,959,242 | ||||||
Accumulated income: | ||||||||
Accumulated net operating income | 8,182,502 | 4,246,227 | ||||||
Net realized gain (loss) on investments, net of income taxes | (3,546,874 | ) | 490,580 | |||||
Net unrealized appreciation (depreciation) of investments, net of deferred income taxes | (744,534 | ) | (2,805,763 | ) | ||||
Foreign currency translation adjustment | 20,948 | 142,625 | ||||||
Net assets | $ | 43,915,571 | $ | 23,092,943 | ||||
Net asset value per share | $ | 5.57 | $ | 3.85 | ||||
UTEK Corporation
Consolidated Statements of Operations
(Unaudited)
Three Months Ended September 30 | Nine Months Ended September 30 | |||||||||||||||
| 2005 | 2004 | 2005 | 2004 | |||||||||||||
Income from operations: | ||||||||||||||||
Sale of technology rights | $ | 9,286,961 | $ | 1,525,949 | $ | 12,466,301 | $ | 2,932,249 | ||||||||
Consulting and other services | 1,010,452 | 488,387 | 2,745,145 | 1,395,046 | ||||||||||||
Investment income, net | 150,970 | 26,150 | 318,263 | 48,877 | ||||||||||||
| 10,448,383 | 2,040,486 | 15,529,709 | 4,376,172 | |||||||||||||
Expenses: | ||||||||||||||||
Salaries and wages | 812,751 | 228,550 | 1,831,906 | 739,694 | ||||||||||||
Professional fees | 204,133 | 122,234 | 547,906 | 367,428 | ||||||||||||
Acquisition of technology rights | 2,144,467 | 370,000 | 3,371,262 | 620,000 | ||||||||||||
Sales and marketing | 538,012 | 323,834 | 1,667,597 | 752,295 | ||||||||||||
General and administrative | 763,307 | 271,811 | 1,799,871 | 1,062,938 | ||||||||||||
| 4,462,670 | 1,316,429 | 9,218,542 | 3,542,355 | |||||||||||||
Income before income taxes | 5,985,713 | 724,057 | 6,311,167 | 833,817 | ||||||||||||
Provision for income taxes | 2,252,424 | 251,871 | 2,374,892 | 297,117 | ||||||||||||
Net income from operations | 3,733,289 | 472,186 | 3,936,275 | 536,700 | ||||||||||||
Net realized and unrealized gains (losses): | ||||||||||||||||
Net realized gain (loss) on investments, net of income tax expense (benefit) of ($2,766,652) and ($2,435,937) for the three and nine months ended September 30, 2005, respectively, and $67,843 and $832,094 for the three and nine months ended September 30, 2004, respectively | (4,178,503 | ) | 112,446 | (4,037,454 | ) | 1,379,157 | ||||||||||
Change in unrealized appreciation (depreciation), (depreciation) of non-controlled affiliate investments, net of deferred tax expense (benefit) of $2,765,722 and $1,243,611 for the three and nine months ended September 30, 2005, respectively, and ($4,698,376) and ($884,311) for the three and nine months ended September 30, 2004, non-controlled affiliate investments, net of deferred tax expense (benefit) of $2,765,722 and $1,243,611 for the three and nine months ended September 30, 2005, respectively, and ($4,698,376) and ($884,311) for the three and nine months ended September 30, 2004, respectively | 6,108,475 | (7,787,343 | ) | 2,061,229 | (1,465,700 | ) | ||||||||||
Net increase (decrease) in net assets from operations | $ | 5,663,261 | $ | (7,202,711 | ) | $ | 1,960,050 | $ | 450,157 | |||||||
Net increase (decrease) in net assets from operations per share: | ||||||||||||||||
Basic | $ | 0.75 | $ | (1.28 | ) | $ | 0.28 | $ | 0.08 | |||||||
Diluted | $ | 0.74 | $ | (1.28 | ) | $ | 0.28 | $ | 0.08 | |||||||
Weighted average shares: | ||||||||||||||||
Basic | 7,563,853 | 5,616,324 | 6,957,300 | 5,417,886 | ||||||||||||
Diluted | 7,685,283 | 5,616,324 | 7,104,371 | 5,727,547 | ||||||||||||
About UTEK Corporation
UTEK® is a leading, market-driven technology transfer company that enables companies to rapidly acquire innovative technologies from universities and research laboratories worldwide. UTEK facilitates the identification and then finances the acquisition of external technologies for clients in exchange for their equity securities. This unique process is called U2B®. In addition to its U2B® service, UTEK offers both large and small capitalization companies the tools to search, analyze and manage university intellectual properties. UTEK has operations in the United States, United Kingdom and Israel. For more information about UTEK, please visit its website atwww.utekcorp.com.
Forward-Looking Statements
Certain matters discussed in this press release are “forward-looking statements.” These forward-looking statements can generally be identified as such because the context of the statement will include words, such as UTEK “expects,” “should,” “believes,” “anticipates” or words of similar import. Similarly, statements that describe UTEK’s future plans, objectives or goals are also forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties, including the financial performance of UTEK and the valuation of UTEK’s investment portfolio, which could cause actual results to differ materially from those currently anticipated. Although UTEK believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, it cannot give any assurance that its expectations will be attained. Shareholders, potential investors and other readers are urged to consider these factors carefully in evaluating any forward-looking statements. Certain factors could cause results and conditions to differ materially from those projected in these forward-looking statements, and some of these factors are discussed below. These factors are not exhaustive. New factors, risks and uncertainties may emerge from time to time that may affect the forward-looking statements made herein. These forward-looking statements are only made as of the date of this press release and UTEK does not undertake any obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.
UTEK’s operating results could fluctuate significantly due to a number of factors. These factors include the small number of transactions that are completed each quarter, the value of individual transactions, the timing of the recognition and the magnitude of unrealized gains and losses, UTEK’s dependence on the performance of companies in its portfolio, the possibility that advances in technology could render the technologies it has transferred obsolete, the loss of technology licenses by companies in its portfolio, the degree to which it encounters competition in its markets, the volatility of the stock market and the volatility of the valuations of the companies it has invested in as it relates to its realized and unrealized gains and losses, the concentration of investments in a small number of companies, as well as other general economic conditions. As a result of these and other factors, current results may not be indicative of UTEK’s future performance. For more information on UTEK and for a more complete discussion of the risks pertaining to an investment in UTEK, please refer to UTEK’s filing with the Securities and Exchange Commission.
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