UTEK Corporation (AMEX:UTK) (LSE-AIM:UTK) today announced financial results for the three and nine months ended September 30, 2007.
Quarter ended September 30, 2007 Operating Results
For the quarter ended September 30, 2007, income from operations (revenue) was $3.7 million as compared to $13.6 million for the quarter ended September 30, 2006. Net income from operations for the quarter ended September 30, 2007 was $188,000 as compared to $4.0 million for the quarter ended September 30, 2006. Approximately 82% and 94% of our income from operations (revenue) was received in the form of unregistered shares of common stock for the quarters ended September 30, 2007 and 2006, respectively.
The net increase (decrease) in net assets from operations (including net income from operations and realized and unrealized gains and losses on investments) was ($134,000) or ($0.01) per weighted average diluted share outstanding for the quarter ended September 30, 2007, as compared to ($4.5) million, or ($0.50) per weighted average diluted share outstanding for the quarter ended September 30, 2006.
The value of the Company's investment portfolio was $36.2 million at September 30, 2007, as compared to $37.9 million at December 31, 2006. Net asset value per common share outstanding was $5.31 at September 30, 2007, as compared to $5.71 at December 31, 2006.
Weighted average diluted shares outstanding were 9,009,776 and 8,906,918 for the quarters ended September 30, 2007 and 2006, respectively.
Nine Months ended September 30, 2007 Operating Results
For the nine months ended September 30, 2007, income from operations (revenue) was $18.0 million as compared to $48.5 million for the nine months ended September 30, 2006. Net income from operations for the nine months ended September 30, 2007 was $4.4 million as compared to $17.4 million for the nine months ended September 30, 2006. Approximately 86% and 94% of our income from operations (revenue) was received in the form of unregistered shares of common stock for the nine months ended September 30, 2007 and 2006, respectively.
The net increase (decrease) in net assets from operations (including net income from operations and realized and unrealized gains and losses on investments) was ($4.1) million or ($0.46) per weighted average diluted share outstanding for the quarter ended September 30, 2007, as compared to $12.1 million, or $1.37 per weighted average diluted share outstanding for the quarter ended September 30, 2006.
Weighted average diluted shares outstanding were 8,982,339 and 8,869,276 for the nine months ended September 30, 2007 and 2006, respectively.
Liquidity and Capital Resources
At September 30, 2007, UTEK had cash, cash equivalents and certificates of deposit of $8.0 million, total assets of $49.3 million and net assets of $47.8 million. Equity monetization for the nine months ended September 30, 2007 was approximately $1.2 million, as compared to $7.3 million for the nine months ended September 30, 2006. The Company had no long-term debt outstanding at September 30, 2007.
Overview
The results for Q3 2007 continue to reflect a period of transition within UTEK's client base. In previous disclosures made by UTEK, we have highlighted our efforts to increase both the average size and diversity of our clients. The Company has been able to successfully increase both the number and the average market capitalization of its clients compared with last year. A measure of this progress is that during the nine months ended September 30, 2007, UTEK entered into fifty three Technology Acquisition Alliance agreements pursuant to which UTEK is retained by clients to search for new technologies available for transfer. This compares with thirty nine client engagements signed in the comparable period last year. The average market capitalization of our current U.S. publicly traded clients is now in excess of $900 million and approximately 63% of such clients are quoted on NASDAQ, NYSE or AMEX. Approximately 20% of our active clients are based overseas. In addition, UTEK's technology transfer clients currently include a number of major multinational industrial companies.
There is a period of time between signing a Technology Acquisition Alliance and the anticipated completion of a technology transfer. One result of having clients with a larger market capitalization is an increase in the time needed to complete technology transfers. Although we have increased the number of Technology Acquisition Alliance clients, we believe the number of technology transfers completed for the nine months ended September 30, 2007 has decreased due to this factor. We completed three technology transfers during the three months ended September 30, 2007 as compared to eight during the three months ended September 30, 2006. We completed fourteen technology transfers during the nine months ended September 30, 2007 as compared to twenty-four during the nine months ended September 30, 2006. Both the number and magnitude of individual technology transfers vary from quarter to quarter.
Financial Position Information
The following table contains comparative selected financial data as of September 30, 2007 and December 31, 2006:
September 30, 2007 | Â | December 31, 2006 | Â | Percentage Increase (Decrease) | ||||
| Total investments | $ | 36,225,210 | $ | 37,879,023 | (4 | %) | ||
| Total assets | $ | 49,298,911 | $ | 53,040,810 | (7 | %) | ||
| Net assets | $ | 47,836,096 | $ | 50,981,162 | (6 | %) | ||
| Common shares outstanding | 9,009,776 | 8,936,009 | 1 | % | ||||
| Net asset value per share | $ | 5.31 | $ | 5.71 | (7 | %) | ||
Conference Call at 11:00 a.m. EDT on Friday, November 2, 2007
UTEK will hold a live conference call at 11:00 a.m. EDT to discuss its third quarter 2007 results. All interested parties are invited to attend the conference call.
Conference call dial-in numbers:
US & Canada: 866-672-2663 UK: 0-800-032-3836 Other International Callers: 973-582-2772 Please reference conference ID# 9363584
About UTEK Corporation
UTEK® is an open innovation company focused on technology transfer. UTEK's services enable companies to acquire externally developed technologies from universities and research laboratories worldwide. In addition, UTEK provides services to help companies create value from their intellectual property. UTEK is a business development company with operations in the United States, United Kingdom and Israel. For more information about UTEK, please visit its website at www.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, they cannot give any assurance that their 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 filings with the Securities and Exchange Commission.
UTEK Corporation | |||||||
Consolidated Statements of Assets and Liabilities | |||||||
| Â | |||||||
| September 30, 2007 | Â | December 31, 2006 | |||||
| (Unaudited) | |||||||
| ASSETS | |||||||
| Investments: | |||||||
| Non-affiliate investments (cost: 2007 - $32,154,481; 2006 - $41,786,374) | $ | 6,912,000 | $ | 14,578,700 | |||
| Affiliate investments (cost: 2007 - $46,655,285; 2006 - $22,354,448) | 20,305,800 | 8,713,900 | |||||
| Control investments (cost: 2007 - $12,540,376; 2006 - $15,485,318) | 6,909,928 | 10,001,772 | |||||
| U.S. Treasuries and certificates of deposit (cost: 2007 - $2,097,482; 2006 - $4,584,651) | Â | 2,097,482 | Â | Â | 4,584,651 | Â | |
| Total investments | 36,225,210 | 37,879,023 | |||||
| Cash and cash equivalents | 5,864,351 | 9,685,111 | |||||
| Accounts receivable, net of allowance for bad debt (2007 - $50,000, 2006 - $38,000) | 424,466 | 534,605 | |||||
| Prepaid expenses and other assets | 334,234 | 375,007 | |||||
| Fixed assets, net | 512,629 | 595,001 | |||||
| Goodwill | 3,014,145 | 3,021,163 | |||||
| Intangible assets, net | 138,908 | 190,100 | |||||
| Deferred tax asset | Â | 2,784,968 | Â | Â | 760,800 | Â | |
TOTAL ASSETS | Â | 49,298,911 | Â | Â | 53,040,810 | Â | |
| Â | |||||||
| LIABILITIES | |||||||
| Accrued expenses | 645,292 | 595,764 | |||||
| Deferred revenue | Â | 817,523 | Â | Â | 1,463,884 | Â | |
| TOTAL LIABILITIES | Â | 1,462,815 | Â | Â | 2,059,648 | Â | |
| NET ASSETS | $ | 47,836,096 | Â | $ | 50,981,162 | Â | |
| Â | |||||||
| Commitments and Contingencies | |||||||
| Composition of net assets: | Â | ||||||
| Preferred stock, $.01 par value, 1,000,000 shares authorized; none issued and outstanding | - | - | |||||
| Common stock, $.01 par value, 19,000,000 shares authorized; 9,009,776 shares issued and outstanding at September 30, 2007 and 8,936,009 shares issued and outstanding at December 31, 2006 | Â $ | Â 90,099 | Â $ | Â 89,361 | |||
| Additional paid-in capital | 52,959,222 | 51,993,822 | |||||
| Accumulated income: | |||||||
| Accumulated net operating income | 34,078,780 | 29,721,366 | |||||
| Net realized loss on investments, net of income taxes | (3,755,456) | (2,065,218) | |||||
| Net unrealized depreciation of investments, net of deferred income taxes | (35,689,621) | (28,897,125) | |||||
| Foreign currency translation adjustment | Â | 153,072 | Â | Â | 138,956 | Â | |
| Net assets | $ | 47,836,096 | Â | $ | 50,981,162 | Â | |
| Â | |||||||
| Net asset value per share | $ | 5.31 | Â | $ | 5.71 | Â | |
UTEK Corporation | |||||||||||
Consolidated Statements of Operations | |||||||||||
(Unaudited) | |||||||||||
| Â | |||||||||||
Three Months Ended Sept 30 | Â | Nine months Ended Sept 30 | |||||||||
| Â | 2007 | Â | Â | 2006 | Â | 2007 | Â | Â | 2006 | ||
| Income from operations: | |||||||||||
| Sale of technology rights | $ | 2,920,800 | $ | 12,173,009 | $ | 14,835,550 | $ | 44,012,206 | |||
| Consulting and other services | 647,329 | 1,275,790 | 2,716,094 | 3,822,114 | |||||||
| Investment income, net | Â | 126,785 | Â | 163,377 | Â | 479,490 | Â | 644,169 | |||
| 3,694,914 | 13,612,176 | 18,031,134 | 48,478,489 | ||||||||
| Â | |||||||||||
| Expenses: | |||||||||||
| Acquisition of technology rights | 837,565 | 4,089,649 | 3,170,844 | 11,236,776 | |||||||
| Salaries and wages | 889,349 | 836,971 | 2,663,656 | 2,540,273 | |||||||
| Professional fees | 504,500 | 331,550 | 1,118,608 | 914,846 | |||||||
| Sales and marketing | 398,110 | 791,744 | 1,488,388 | 2,555,832 | |||||||
| General and administrative | 665,879 | 1,032,290 | 2,105,432 | 3,104,511 | |||||||
| Goodwill impairment | Â | - | Â | - | Â | 33,030 | Â | 234,940 | |||
| Â | 3,295,403 | Â | 7,082,204 | Â | 10,579,958 | Â | 20,587,178 | ||||
| Income before income taxes | 399,511 | 6,529,972 | 7,451,176 | 27,891,311 | |||||||
| Provision for income taxes | Â | 211,319 | Â | 2,503,371 | Â | 3,093,762 | Â | 10,487,780 | |||
Net income from operations | 188,192 | 4,026,601 | 4,357,414 | 17,403,531 | |||||||
| Â | |||||||||||
| Net realized and unrealized gains (losses): | |||||||||||
Net realized gain (loss) on investments, net of income tax expense (benefit) of ($333,016) and ($1,019,780) for the three and nine months ended September 30, 2007, respectively, and ($234,851) and $1,099,905 for the three and nine months ended September 30, 2006, respectively | Â Â Â (551,958) | Â Â Â (389,255) | Â Â Â (1,690,238) | Â Â Â 1,823,042 | |||||||
Change in unrealized appreciation (depreciation) of investments, net of deferred tax expense (benefit) of $138,616 and ($4,098,150) for the three and nine months ended September 30, 2007, respectively, and ($4,893,610) and ($4,273,672) for the three and nine months ended September 30, 2006, respectively  |  |       229,749 |  |     (8,110,934) |  |       (6,792,496) |  |     (7,083,416) | |||
| Â | |||||||||||
| Net increase (decrease) in net assets from operations | $ | (134,017) | $ | (4,473,588) | $ | (4,125,320) | $ | 12,143,157 | |||
| Â | |||||||||||
| Net increase (decrease) in net assets from operations per share: | |||||||||||
| Basic | $ | (0.01) | $ | (0.50) | $ | (0.46) | $ | 1.39 | |||
| Diluted | $ | (0.01) | $ | (0.50) | $ | (0.46) | $ | 1.37 | |||
| Weighted average shares: | |||||||||||
| Basic | 9,009,776 | 8,906,918 | 8,982,339 | 8,737,230 | |||||||
| Diluted | 9,009,776 | 8,906,918 | 8,982,339 | 8,869,276 | |||||||
| Â | |||||||||||
| Dividend declared per share: | - | - | - | $ | .02 | ||||||
