Special Note Regarding Forward-Looking Statements

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

Restatement

On April 22, 2009, the Audit Committee and Board of Directors of UTEK Corporation concluded that the Company's previously issued financial statements for the fiscal year 2008 contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2008 and the financial statements for the periods ended March 31, 2008, June 30, 2008 and September 30, 2008 contained in its Quarterly Reports on Form 10-Q should be restated. The Company has restated such financial statements and certain financial information as contained in the Company's Form 10-K/A and Forms 10-Q/A for the aforementioned periods as filed on May 7, 2009.

The Company determined that pursuant to Statement of Financial Accounting Standards No. 5, "Accounting for Contingencies," we should have accrued and reported as a liability in our 2008 financial statements a payment obligation which arose in connection with our entry into an employment agreement on March 1, 2008 with our then chief executive officer, Clifford M. Gross, Ph.D. Pursuant to the terms of the employment agreement, Dr. Gross was entitled to receive a payment, at the end of the term of the agreement or if Dr. Gross is terminated for any reason, equal to the number of years Dr. Gross had worked for us times $100,000 per year, "grossed-up" to cover any tax liability. At the time of our entry into the employment agreement, Dr. Gross had been employed by us for 10.5 years. Given that the payment obligation was certain to be paid at some point in the future (i.e., when the employment agreement was not renewed at some future date) and the amount of the payment obligation was determinable at the time of entry into the employment agreement, we should have accrued and reported such payment obligation as a liability in our financial statements for the quarter ended March 31, 2008 as well as in our subsequent interim and annual financial statements for 2008.

As previously disclosed in our Form 10-K for the year ended December 31, 2008, Dr. Gross retired from his position as our chief executive officer on March 1, 2009, following the conclusion of the term of the employment agreement, including a subsequent extension to the term thereof. Moreover, as disclosed in a Form 8-K filed with the SEC on April 13, 2009, we entered into a separation agreement with Dr. Gross that modified the payment terms, but not the monetary obligation amount that Dr. Gross was entitled to receive pursuant to the employment agreement.

See Note 2 "Restatement of Prior Financial Information" of the Notes to the Financial Statements included in this Form 10-Q for a detailed discussion of the effect of this restatement.

Overview

Recent Business Developments

During the first quarter of 2009, the Company has been focusing on the continued integration of the four businesses that it acquired in 2008. However, the revenues from certain of the Company's divisions have decreased in the current period as a result of the current economic conditions. In response to these conditions, the Company has made significant efforts to reduce its overhead costs, which included a reduction in the number of employees throughout the Company.

As previously disclosed in our Definitive Proxy Statement filed with the SEC on April 30, 2009, the Board of Directors is recommending that stockholders vote in favor of a proposal to authorize the Board of Directors to withdraw the Company's election to be treated as a business development company ("BDC") under the 1940 Act. We would not consider de-election of the BDC until the Company divests itself of its significant equity interests in the portfolio companies in which it holds a more than 20% ownership. Because we have significant equity interests in these portfolio companies, we would be required to use the equity method of accounting to consolidate the financial accounts of these portfolio companies with those of the Company after we withdraw our election to be regulated as a BDC. However, because the Company does not control these portfolio companies, the Company will not be able to dictate the timing of their provision of financial information to the Company for inclusion in its financial statements, which may result in the late filing of the Company's annual reports on Form 10-K and quarterly reports on Form 10-Q with the SEC. Therefore, the Company began liquidating a portion of its investment portfolio during the first quarter of 2009. We sold some or all of our shares in a significant number of our portfolio companies for $2.1 million in cash and other assets, which resulted in realized losses of $37.0 million and unrealized appreciation of $35.9 million in the fair value of our investments during the period.

As previously disclosed in our Form 10-K for the year ended December 31, 2008, the Company's chief executive officer retired from his position upon the conclusion of the term of his employment agreement on March 1, 2009. In connection therewith, the Company accrued an additional $143,000 in severance liability in the first quarter of 2009.

Executive Summary

We help clients become stronger innovators, develop compelling strategies to drive growth, rapidly source externally developed technologies, create value from their intellectual property and gain foresight into marketplace and technology developments that affect their business.

During 2008, the Company acquired four companies to enhance our ability to provide end-to-end innovation services. We will continue to seek to acquire additional innovation services companies that enhance our capabilities or expand the territories in which we operate.

Our total assets were $43.1 million and our net assets were $34.0 million at March 31, 2009, compared to $45.9 million and $37.2 million at December 31, 2008, respectively. Net asset value per share was $3.07 at March 31, 2009 and $3.42 at December 31, 2008. At March 31, 2009, we had $1.5 million in debt outstanding, $3.6 million in cash and cash equivalents and $687,000 of investments in U.S. Treasuries and certificates of deposit.

Income from operations for the three months ended March 31, 2009 totaled approximately $2.8 million, as compared to $3.7 million for the three months ended March 31, 2008. Net loss from operations for the three months ended March 31, 2009 totaled approximately $2.1 million as compared to $1.7 million for the same period of 2008. Net realized losses on investments totaled approximately $37.0 million for the three months ended March 31, 2009 as compared to $126,000, net of deferred tax effect, for the same period of 2008. In this regard, we received gross proceeds of cash and other assets of $2.1 million for the three months ended March 31, 2009 and $1.5 million in cash for the same period of 2008 in connection with the sale of the securities we received in connection with our technology acquisition alliance agreements and technology transfers. Proceeds received in connection with the sale of our investments for the three months ended March 31, 2009 included $400,000 in cash, $200,000 in an additional investment in UTEK Real Estate Holdings, Inc., and $1.5 million in a note receivable from a company to which we sold certain of our investments. Net change in unrealized appreciation (depreciation) of investments was $34.1 million for the three months ended March 31, 2009 as compared to $(4.6 million), net of deferred tax benefit, for the same period of 2008. The net change in unrealized appreciation of $34.1 million for the three months ended March 31, 2009 was primarily related to the reversal of previously recorded unrealized depreciation upon the sale of investments for a realized loss.

Our financial condition is dependent on a number of factors including our ability to effectuate technology transfers and the performance of the equity investments that we receive in connection with these transfers. Substantially all of our investments are in development stage and start-up companies and thinly traded public companies. These businesses are thinly capitalized, unproven, small companies that lack management depth, are dependent on new, commercially unproven technologies and have no or a limited history of operations.

Current Market Conditions

Since mid-2007, global credit and other financial markets have suffered substantial stress, volatility, illiquidity and disruption. These forces reached unprecedented levels in late 2008, resulting in the bankruptcy or acquisition of, or government assistance to, several major domestic and international financial institutions. These events have significantly diminished overall confidence in the financial markets and caused increasing global economic uncertainty. This reduced confidence and uncertainty could further exacerbate the overall market disruptions and risks to businesses in need of capital, including us and our portfolio companies. Moreover, the deterioration in the equity markets has had a significant impact on the valuations of our investments and the cash proceeds that we have been able to obtain upon the sale of our investments. A further worsening of this situation or a prolonged period without improvement from the levels at the end of the third quarter of 2008 could adversely affect our financial position.

Portfolio Activity

The following is a list of significant changes in our portfolio during the three months ended March 31, 2009:

• The sale of some or all of our shares in a significant number of our portfolio companies for approximately $2.1 million in cash and other assets, which resulted in realized losses of $37.0 million, and

• Net unrealized appreciation of $34.1 million in the fair value of our investments.

Our most significant portfolio investments at March 31, 2009 were in UTEK Real Estate Holdings, Inc., EClips Energy Technologies, Inc., Greenwood Hudson Portfolio, LLC and Cyberlux Corporation. These four investments totaled $8.9 million at fair value and represented 87% of our investments, excluding our investments in U.S. Treasuries and certificates of deposits, and 21% of total assets at March 31, 2009.

The net unrealized appreciation of $34.1 million for the three months ended March 31, 2009 was primarily due to the reversal of unrealized depreciation on various investments upon their sale during the period of approximately $35.9 million; partially offset by a reduction in value of the investment in Mimedx Group, Inc. of $1.8 million.

While the realized and unrealized losses can be significant, failures among small cap companies are not unexpected and may occur in the future. The current portfolio is comprised of 19 holdings. Many of these positions are in small capitalization companies, which over time may have high failure rates due to a variety of factors. For clients that fail, UTEK may lose the entire amount of its capital spent acquiring and transferring the technology to them.

The value of our investments can fluctuate due to factors that are specific to each investment (e.g., inability of these companies to obtain additional capital, to execute their business model, or termination or obsolescence of their technology licenses, etc.) or to general marketplace factors. Moreover, in the event that the United States economy remains in a prolonged recession, it is possible that these companies could be negatively impacted, which could ultimately lead to greater difficulty in our ability to sell our equity investments in such companies at acceptable levels, or at all.

Results of Operations

Income from Operations (Revenue)



                                        Three months ended March 31,       Percentage
(in thousands, except percentages)        2009                2008           Change
Innovation consulting services       $         1,919     $            -             0 %
Sale of technology rights                         -                2,712         (100 )%
Subscription and other services                  814                 869           (6 )%
Investment income, net                            31                  85          (64 )%

Income from Operations               $         2,764     $         3,666          (25 )%

Innovation Consulting Services

Our innovation consulting revenue increased $1.9 million for the three months ended March 31, 2009 in comparison to same period in 2008 as a result of our acquisitions of innovation consulting services companies in 2008. Our consulting revenues for the first quarter of 2009 have been adversely affected by the current economic conditions. Based on current activity, we expect these revenues to increase beginning in the third or fourth quarter of 2009.

In subsequent periods, it is our intention to pursue additional strategic acquisitions which if successful will continue to increase the innovation consulting services revenue and enhance our ability to better service the innovation needs of our clients.

Sale of Technology Rights

Sale of technology rights revenue decreased as a result of our not completing any technology transfers during the three months ended March 31, 2009 as compared to having completed four technology transfers during the three months ended March 31, 2008.

To mitigate the risk of declining stock prices with respect to the stock consideration we receive in connection with our technology transfers, we believe that going forward most technology transfers will be completed for cash as opposed to stock. As a result, management continues to expect that our 2009 revenues from the sale of technology rights will decrease from our 2008 revenues from such transactions.

Subscription and Other Services

Our subscription and other services revenue was $814,000 for the three months ended March 31, 2009 versus $869,000 for the three months ended March 31, 2008. Included in this income category are our global technologies licensing income from our technology acquisition alliance fees, our information services website subscription income, our patent analytic fees and various other services.

Our global technologies licensing income was approximately $274,000 for the three months ended March 31, 2009 as compared to $260,000 for the three months ended March 31, 2008. The number of new agreements added in the first three months of 2009 was two as compared to fourteen new agreements added in the first three months of 2008.

Our information services division had website subscription income of approximately $540,000 for the three months ended March 31, 2009 as compared to $529,000 for the three months ended March 31, 2008. The increase is attributable to a new product sold through Pharmalicensing called Partnering Search through which we use our partnering experts to search for partners on behalf of the customers as well as provide a fully qualified list of target companies, instructions on how to contact target companies, make introductions and coordinate initial contact/conference calls.

Our other services including patent analytics generated $-0- for the three months ended March 31, 2009 as compared to $80,000 for the three months ended March 31, 2008.

It is our intention to grow our subscription and other services revenue internally as well as with additional strategic acquisitions during 2009.

Investment Income, net

Investment income decreased by $54,000 for the three months ended March 31, 2009, as compared to the same period of 2008, as a result of a decrease in the cash and cash equivalents balances, as well as lower interest rates during the first quarter of 2009.

Our income from operations can vary substantially on a quarterly basis due to a variety of factors. Therefore, quarterly income from operations should not be annualized to predict expected annual results and may not be indicative of future performance.

Expenses

Direct Costs of Innovation Consulting Services



                                                       Three months ended March 31,           Percentage
(in thousands, except percentages)                       2009                   2008            Change
Direct costs of innovation consulting services     $           1,987         $       -               100 %
As a percent of innovation consulting services                   104 %                0 %         104ppt *

* The abbreviation "ppt" denotes percentage points.

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. This expense line item was created in the second quarter of 2008 as a result of the acquisitions of Strategos, and subsequently Innovaro and Social Technologies Group; therefore

there is no innovation consulting services expense in the first quarter of 2008 as compared to $2.0 million in the first quarter of 2009. During the first quarter of 2009, the innovations consulting income was adversely affected by the downturn in the economy. We have taken steps to reduce costs, including reductions in staff, as well as reduced hours for certain remaining staff. We expect these cost reductions to increase the margins for our consulting services division during the remainder of 2009.

Acquisition of Technology Rights



                                                  Three months ended March 31,           Percentage
(in thousands, except percentages)               2009                  2008                Change
Acquisition of technology rights              $       -          $           1,184             (100 )%
As a percent of sale of technology rights              0 %                      44 %            (44 )ppt

Acquisition of technology rights costs consist of the direct costs associated with our 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 overall decrease in acquisition of technology rights from the three months ended March 31, 2008 to the three months ended March 31, 2009 was due to the Company not completing any technology transfers in the first quarter of 2009 compared to having completed four technology transfers in the first quarter of 2008.

Acquisition of technology rights costs are directly related to sale of technology rights revenue. We expect that the acquisition of technology rights costs will continue to decrease in 2009 in conjunction with a decrease in this revenue. In addition, we plan to focus on technology transfers for cash remuneration or equity transfers that do not require significant amounts of upfront cash costs.

Salaries and Wages



                                                  Three months ended March 31,
                                                                         2008              Percentage
(in thousands, except percentages)               2009                 (Restated)             Change
Salaries and wages                            $       984          $          2,858               (66 )%
As a percent of income from operations                 36 %                      78 %             (42 )ppt

Salaries and wages include non-sales employees and officer salaries and related benefits including bonuses and stock-based compensation. Salaries and wages decreased by $1.9 million primarily due to the accrual of our CEO's severance liability of $1.65 million during the three months ended March 31, 2008. The remaining decrease relates to a significant reduction in employees and the retirement of our CEO during the three months ended March 31, 2009. We expect that salaries and wages for 2009 will continue to decrease or remain flat in comparison to 2008.

Professional Fees



                                                 Three months ended March 31,            Percentage
(in thousands, except percentages)               2009                   2008               Change
Professional fees                            $         223          $         308               (28 )%
As a percent of income from operations                   8 %                    8 %            0ppt

Professional fees include accounting fees, legal fees and valuation expenses for our investments. The decrease in professional fees for the three months ended March 31, 2009 compared to the three months ended March 31, 2008 relates to a $63,000 decrease in legal fees related to an acquisition made in the first quarter of 2008, which was not repeated in 2009, as well as a $15,000 decrease in valuation expenses due to the reduced number of investment holdings in 2009.

Sales and Marketing



                                                 Three months ended March 31,            Percentage
(in thousands, except percentages)               2009                   2008               Change
Sales and marketing                          $         458          $         648               (29 )%
As a percent of income from operations                  17 %                   18 %              (1 )ppt

Sales and marketing expenses include advertising, marketing, salaries and commissions paid to sales personnel, commissions paid to outside service providers, travel and other selling expenses. The decrease in sales and marketing expenses relates primarily to a reduction in sales salaries of $167,000 for the three months ended March 31, 2009 as compared to the same period of 2008. This reduction is a result of downsizing the number of employees in all areas of the company including sales staff.

General and Administrative



                                                  Three months ended March 31,            Percentage
(in thousands, except percentages)                2009                   2008               Change
General and administrative                    $         795          $         740                 8 %
As a percent of income from operations                   29 %                   20 %            9ppt

The increase in general and administrative costs for the three months ended March 31, 2009 compared to the three months ended March 31, 2008 is a direct result of the acquisitions made in 2008. During the first quarter of 2009, there were increases in insurance of $53,000 and in rent of $50,000 which relates directly to the additional offices of the acquisition companies. These increases were partially offset by an overall company plan to reduce all aspects of overhead.

We expect that general and administrative expenses for the remainder of 2009 will remain consistent with the first quarter of 2009.

Depreciation and Amortization



                                                Three months ended March 31,           Percentage
(in thousands, except percentages)                 2009                  2008            Change
Depreciation and amortization                 $           407           $    86               375 %
As a percent of income from operations                     15 %               2 %           13ppt

The increase in amortization and depreciation expense for the three months ended March 31, 2009 compared to the same period of 2008 was a direct result of the four business acquisitions made during 2008. We acquired $12.4 million in intangible assets and $350,000 in fixed assets during 2008 in connection with these acquisitions, which will significantly increase our quarterly amortization and depreciation expense throughout 2009 and in subsequent years.

Net Realized Gains (Losses) on Investments

Three months ended March 31, Percentage (in thousands, except percentages) 2009 2008 Change Realized gains/ (losses) $ (37,018 ) $ (126 ) 29,256 %

Net realized losses on investments, net of income tax effect, amounted to $37,018,135 for the three months ended March 31, 2009 and were related to sales as follows:

                                                              Number of       Realized
Portfolio Company                                              Shares        Gain (Loss)
Advanced Medical Isotope Corporation - preferred shares           95,000    $  (1,387,427 )
Advanced Refractive Technologies, Inc. - preferred shares        294,000       (3,293,316 )
American Soil technologies, Inc.                               6,498,845       (1,010,579 )
Avalon Oil and Gas, Inc.                                       3,373,107       (1,595,566 )
Cytodyn, Inc.                                                  2,040,000       (2,422,968 )
EClips Energy Technologies, Inc.                               8,437,500       (1,553,583 )
Tesla Vision Corporation - preferred shares                    1,559,903       (1,054,032 )
Tesla Vision Corporation - common shares                          95,000       (2,020,721 )
Stealth MediaLabs, Inc.                                        4,221,165       (1,192,848 )
Klegg Electronics, Inc.                                        4,169,430       (2,322,709 )
Rim Semiconductor                                            210,000,000       (1,251,861 )
MATECH Corporation                                                17,823       (2,872,617 )
. . .