Speaker 1  0:00  
Good afternoon. Welcome to tech transfer finance beginners course presented by Autumn. My name is Holly Lundgren autumns online professional development manager. And I'll be your staff host for today. I would like to take a brief moment to thank autumns annual webinars sponsor Marshall, Gerstein, and Borun. And now, I will welcome our distinguished speaker. Lawrence has been the finance manager for Cal Tech's Office of Technology Transfer and corporate partnerships since April of 2009. Caltech is one of the oldest and busiest tech transfer and corporate partnership offices having over 500 active license options, and Ay ay ay agreements. Laurens has an MBA with a finance emphasis from Pepperdine University, and began working in banking in 1987. Working mostly for multisite small business since the late 1990s. Lawrence also has an entrepreneurial bent, he spent several years as an independent contractor translating court reporter machine shorthand into English for LA Superior Court, while also freelancing as a Windows software instructor. And now we'll go ahead and turn it over to our speaker. Welcome, Laura.

Speaker 2  1:19  
Thank you, Holly, wow, I just saw years of my life flashed before my eyes. Hello, thank you everyone for logging into this webinar, I'm warrants. I've never done a presentation where I could not make eye contact with the rest of the group. So this is a new format for me. If you are, I put this together with my own first two or three years of technology transfer experience in mind, kind of a long list of things I wish I had known before I started. So if you're two or three years new to tech transfer, or or maybe if you're not really involved in the finance function, I hope that there's something in this that is a benefit to you, I was advised to take most all of your questions at the end. Because it's so easy to get off on a tangent, but go ahead and type in your answers. I'm sorry, I'm typing your questions as they come up. And if they're fast and straightforward, I'll just answer them. And we will certainly at the end go back over anything that anybody wants to. So when I first started at Cal Tech, I was new to both tech transfer and also to university finance. And some issues came up because of that. And frankly, it can take two or three years for certain issues to present themselves at all. So one of the things is you'll hear in the in person gatherings that we have for autumn, is a lot of us are finding that our institutions are throwing more and more work at us that really isn't technology transfer related. And because we're one of the more businesslike camp offices on our campuses, as opposed to all the other academic offices, some of it the last Maryland gathering called it the curse of excellence, she said, the more you do these things, well, the more they give to you. So when I first came into contact with one of these, I also came into contact with this, these things called burdened, or overhead funds versus non burdened funds. And all that means is, and this is really common in universities is some accounts have a burden. So for easy numbers, I'm just going to use $1,000 and a 10% burden. And if you deposit $1,000 into one of these accounts only 900 actually goes in, because the university takes a slice of it first. So the thing if you come into contact with Verdun funds, the things couple of things you want to keep in mind about them is that if you know, for example, that you need to spend $1,000. And that's why you're opening a particular kind of account, you actually have to deposit more than you need, so that after the burden happens, the money that you need is there. So in this example, you you deposit a little more than $1,100. So if you had 1000 to start with after the burden. The other thing is that the burden can come right off the top. So you deposit 1000, but there's only 900 there, or it can come off as you spend it. So you put in 1000 there's 1000 there, but every time you spend money out of that account, they tack on an extra 10% or whatever the burden amount is. So that was new to me burdened accounts. Another thing that I knew about but didn't have to ever really deal with was this idea of rolling accounts versus expiring accounts that reset their balance every year. So some I had worked mostly for small businesses and multiple small businesses. And the account for example that I spent, I paid legal fees out of on the last day of the fiscal year, if I had $10,000 left over because I hadn't spent it that was available to me the next day when the new fiscal year started. And I had a little bit extra in the next year and many but Not all transfer accounts don't do that they reset their balances. So if you don't spend the money allocated to you, you lose it. Conversely, some accounts can be overspent. And that was something I had never dealt with before, because I was used to mostly credit lines or accounts that had an overdraft. So once you hit a zero balance, you were done. And in fact, many university accounts can be overspend. So one of the things that I have to do, one of my responsibilities is keeping track of our budget. I don't police our budget, but I do keep track of it. And every month, I send the head of our department and my supervisor, a report that says how much we have spent at the end of that month versus how much we should have spent based on where we are in the years. So the first month is 112 of the budget. And tracking that if this is one of your responsibilities, it's really helpful to catch an overspend the earlier, the better. It's just just a good thing. Another thing that's come up for me over the years in my office is that there are exceptions to rules that have been grandfathered in. So if your office has been around for a while, and you're dealing with whatever accounts you usually deposit to expand from, if you go to, to set up an account, that's exactly the same. And we tell your finance department, I want it to work just like this account we've been using for years, the rules may have changed, the account you've been using may have been grandfathered in. And they let you keep doing it the old way. So just keep in mind that rules can and often do change in a university setting. Are you a tech transfer employee? Or are you a finance department employees. So at the autumn gatherings, the vast majority of us are tech transfer employees every once in a while you'll get a university's finance employee in there. And so not being finance department employees, raises some some challenges. I for example, when I get a royalty check, and I can't directly affect any of our accounts, I have to fill out paperwork and hand them over to the finance department. And then someone else affects our accounts. So one of the things that I do is when I get a check in, I scan it and all the paperwork that came with it, and the deposit slip that I created, so that I can refer back to it at a later date. There are numerous scenarios that are there too many to really go into for this overhead presentation. But it's really helpful to have that original picture of a check the deposit slip. I named them the same thing every single time. So what I'll do is, is save that PDF file to the licensees folder, all of our licensees have their own folder. And then I give it the name, deposit the amount, comma, the check number, comma and dated the date that I'm depositing. And this is a good time to mention that, that that date that it's deposited matches my department's records, and our database, our department's database records, but it almost never matches University's records. Because there's always almost always at least a one day or more delay before a deposit makes it into the university system because it goes through a few hands until it gets to someone that that enters that information. So so there's that I also highly recommend that you find out the wording that your institution uses, because we all throw around words like revenue or income or net and, and all of us can mean slightly different things by that. So So for example, what we call in our tech transfer department reimbursement for legal expenses. My university calls revenue, what we call royalty payments, they call royalty didn't come. So that's good and equity payments they call equity income. But for a while, for my first few weeks, every once in a while I was talking at odds and I thought I was being understood in the finance employee who thought they were being understood and we weren't. And this will become more apparent in a couple of slides why it's important to find out what different people on campus call the exact same money and that last bullet equity payments. And we'll hit on this again in a couple of slides. An issue that arose for me is that equity money the normal almost the normal or most common way that equity money can come into your departments accounts is your institution is holding stock. They decide to liquidate it. They debit the brokerage firm account, and amount and they deposit that same amount into your department's accounts. So there's an offsetting Each has an offset Any transaction. But every once in a while, you can be sent money directly from a licensee. And the reason they're sending it to you is because you own stock in the company. And so when that will happen, I deposited that money into the equity accounts we have, we have distinctly separate accounts for equity money. And that really confused our finance department because they couldn't see an offsetting transaction where they hid liquidated shares. So and that was one of those instances where we talked round and around each other, each thinking we were both understanding the other. So we'll talk a little bit more about that in another slide. We use it KelTec the system, the enterprise system, and we use Oracle and a lot of us I know use Oracle, but not everyone does. So this bullet common fields are some way to track one to one, especially given common amounts like $10,000. There is.

Speaker 2  10:58  
I discovered very quickly when I started this job, that $10,000 deposit is a very common amount. And because the dates don't match exactly, if I had several $10,000 deposits in one month, when I later went to distribute royalty payments to inventors on one of those, I had to tie it back to a specific transaction receipts. And it was kind of hard to know exactly which one was the one I was distributing on. So I found in conversations with the finance department, that there is a comment field and most of these enterprise systems, and certainly Oracle has a field where you can type in anything that you want. Most of the fields are automatically populated, and you can't change them. But the comment field, you can make it say anything. And so as part of the deposit receipt, I put in the common field, our agreement number because each of our agreements has its own unique number, and also the check number. And that lets me search through Oracle for a specific transaction in a way that I otherwise would not otherwise can't win. It's unique amounts like you know, $1,208.04. That's pretty easy. But But common amounts like even 10,000 or even 25,000. Those can get confusing we do. I also wanted to say that if you're a smaller office, this may not become an issue, but we do about 500 deposits a year, a little over 40 every month. So it quickly gets messy if you're if you don't make use of this common field, the common field is your friend, I guess that's what I want to say. He said that the deposit dates don't match and that it is It's just helpful for distributions. But it's helpful for other reasons that again, are too numerous to go into, I think for this presentation. Incoming monies, we all all of the tech transfer offices across the country. We have broad categories of monies, three broad categories. The first is royalties. So when you hear people say royalties, they they can mean annual minimum royalties, licensees running royalties, option fees, there's a lot of things that we call royalties. The other major category is patent expense reimbursements. And then the last one is is equity money when, when it comes in. So those are the three broad categories of monies that can come in. And then I would like to talk about Institute systems and possible reporting that you may be responsible for. So most of us do, and we certainly do an annual report. And I balanced that quarterly. So what happens when we do the annual report that basically says how much we got in his royalties, how much we got in his equity? How much was patent expense reimbursements? How much we spent on legal bills? The finance department sends me a spreadsheet of all of our transactions. They summarize them and they say, here's how much we think you spent in these categories. Let us know that you've agreed or, or why if not, and so I do a mock one of these reports every quarter, because since we're not finance department employees and our works handed off to others, many of our it's not just me, many of our finance departments have a lot of turnover. And they have new staff and they have temporary staff especially toward the end of the fiscal year. And so what will happen is items can get miscategorized and so even if they go into correct account, like if I deposit a royalty check into our royalty account, if it's categorized as revenue, rather than as royalty income, then it looks like we're out of balance even though technically we're not. And the other thing that very last bullet summing accounts versus summing types of income. Many institutions but not all will add up categories of money and rather than adding up the transactions in a given account, so even though money goes into the correct account, they're not looking at the balance of that account, they're looking at the total sum of categories of money. So the other thing you want to find out about your annual reporting is, are you producing the entire thing yourself? Or are you just handing over data that will be included in someone else's larger report? And and how do they want that? Do they want an Excel spreadsheet to they want a Word document, you want to find out how they want that information, it's the whole thing is yours to to control. Department urine reporting, or Institute urine report with your help, we just said that. Another thing regarding your institution's computer systems is you want to find out what systems you need login access to. And I didn't realize there were so there were some things in my case. So I have one login that lets me go in and see all the transactions that happened on our accounts, I have a separate login to go in and make distribution requests to pay a law firm that we owe money to or to give a royalty check to an adventure. And then a separate system that I I didn't know about for almost the first year, where I could go in and log in to see that checks that were issued, whether or not they had cleared our bank and the date that they cleared. Because sometimes inventors would call me and say, I never got this check. And, and you go and look it up. And when you tell them, we'll get clear on this date, then they remember then they find it in their records. So the thing about that, and having different systems like this is very common, going by things I've heard in the in person autumn gatherings over the years, and that seems to keep in mind is that, in my case, my department's information in all three systems looks completely different. There's no similarity between the three of them. So it's good to get in there and play. And what I recommend you look at is the entire process to find out what you might need log in access to so from the time you request a check, to the time that check is cashed? Can you see all phases of that for a given transaction? And if you can't, then you probably can get access to some system you don't know about yet. What does your information look like? That's what I was saying the information looks different in in all of the various systems. And then I think the next Okay, so here I put up just a an example of going back to what we call money, and what other departments call money. So the first little box, there's tech transfer records, versus finest Department records. So what we call royalty income, they call royalty income, but what we call patent Expense Reimbursement they call revenue. And so what happens is when these items on the left, just in this easy example, get miscategorized royalty income is miscategorized as revenue, what can happen is, it looks like you're way out of balance, but you're not, it's just that the money has been put in the wrong in the wrong category. And, and the reason just to touch back again on the the balancing this quarterly with your finance department is when there's only one transaction that's wrong like this, then when it's my the way my institution does it, if my royalty income and my revenue is out the same amount, then it's obvious that something was tagged one thing was tagged the wrong way, as soon as there's more than one, the only way I found to come to the correct amounts and make sure we balance is to go line by line by line through every single transaction and check them all off. And it's super time consuming. So it's just easier to do that every quarter than to wait until the end of the year to find any of these mistakes or miscategorized.

Speaker 2  19:05  
Equity. Okay, let's talk a little bit about equity. There could be a whole presentation just on equity all by itself. So this is going to be a very high level view of some important items to keep in mind when dealing with the subject of equity. First of all, it can take years for equity to become worth anything. And and so the reason that that's an issue is because oftentimes the people who were involved in the transaction who set up a license agreement who took equity in lieu of something for the license agreement, they no longer work there. It's your institution, so you can't ask them there's no one to ask. So taking copious detailed notes is something I can't recommend strongly enough. So one of the first things you want to keep track of is why you were issued the equity in the first place and just know that you can get common common or preferred shares or both. When, and, and why and how that happens is again too detailed, but you need a common or preferred shares. And you want to keep track of why you were issued the shares that you were. So for example, if you were given a certain number of shares, and that was to be used for patent expense reimbursement, you wouldn't typically share those funds, with inventors or any third parties that CO owned the the technology with you, because it's meant to reimburse you for expenses. But if you did take some of the money as consideration for the agreements, generally, that kind of money becomes eligible for possible distributions to others. And so you have to keep it separate. Again, I just want to hit this because it was such an issue for me for a while is, is making sure you find out how that equity money arrived at your institution? Does it go through the normal process of your finance department, cashing in stock and transferring money to you? Or did it just come to you from a third party come to you directly from the licensee. And then, typically, and this is important, you will get one lump sum payment for all the shares that you hold. So you have to know what percentage of that total was for patenting sentry investment, and what percentage of that total was not for that, so that you can determine how much you may have to distribute to other inventors. And then I see this other bullet automatically count and cardio versus physical certificates. Something that's happening a lot in the last couple of years is that more and more small businesses like our licensees are using a system called Carta, which sends you a an electronic stock certificate versus a physical certificate. So a couple things about that is we use and your institution may use an independent third party, that's a custodian for your stock certificates. Our independent third party requires us to get a physical stock certificate. That's never been a problem. When someone uses in Carta, they've always said, Sure, we'll send you one. But you still need to go into Encarta and log in and accept your shares, because that's how the license ze keeps track of who's accepted their shares and who hasn't. So So you have to do both in that case, but just know that you may need it may or may not need a natural physical certificate. And then the last thing I want to say about equity is just to mention the concept of lockup periods. So if you, let's say, you hit it big, let's say you think you're gonna get a million dollars for the shares that you're holding in a company, you don't want to tell anyone that a million dollars is coming from this, because there's often a lot of periods where a percentage of that money is held back for a period of time, a typical percentage is 15%. And a typical amount of time is 18 months, but neither of those is written in stone, just know that you want to explore the possibility of of a lockup period when dealing with equity.

Speaker 2  23:06  
Oh, okay, so here, also about incoming monies. Now we're off the subject of equity, you want to find out if so I create several different reports for several different people on campus. And they all want to know, sometimes it looks like the same information. And so I can tweak one report to fit for one person to fit another. But, but they all want to know slightly different things. For example, sometimes, a given person wants to know if the amounts of money we're talking about were the gross amount, the total that came in. And so I'm just wondering if the net the amount that we get to keep after, for whatever reason, distributions or whatever else. So you want to get that clear, when someone's asking you for a report that has money, do they want the gross or the net, and some want both? They want, they want to know if the money was 100% income for a given transaction, or if there's some partial liability that's owed elsewhere. One of my reports wants to know, among other things, if the money that came in was from a foreign source, and for us, if I know, for example, if I get a check from Texas, that's drawn on a Texas bank, but I know that that that that licensees parent company is a foreign company, that counts was foreign sourced for us. You may have to track if money comes from specific litigation, that can either be something that was thrown at you that's not to transfer related, or you may have had to enforce your patent rights. So that may be something that has to be tracked. You might need to know if the deposits you're making were allocated, in part or in whole to a special fund of some kind. That can happen. And we have a situation and I know other institutions do, where there's a large entity that sends us money, and it just sits in limbo Bo, for a certain amount of time until something happens. So in our case, they'll send us money, we hold on to it for one year. And at the end of one year, it, one of two scenarios will happen. So if scenario one happens, we allocate the money one way. And if scenario two happens, we allocate the money another way, and those funds need to be so those ones always need to be available beyond the current fiscal year that can't be put into one of those accounts, that expires and resets its balances. This was very new to me, because I had always had to allocate money somewhere either as income or some kind of liability. But there can be instances where money literally sits in limbo, and isn't categorized as other, but you have to deposit the check or the check will stale date. So this was a, this was a very unique to university finance. situation for me. And then, on the subject of outgoing royalties, there's some things to keep in mind. This is when you're making payments to people. So money comes in, and it may be eligible to distribute to inventors. Typically, there's three large categories that has to be kept in mind. And that's outstanding legal expense. Any joint owners that also have to be paid if there are and also inventors. And these can happen when you're calculating how much to pay in ventures, for example, these three things can happen in any order. Most of us will take out legal expenses first, and then what's left over, we'll share with inventors or joint owners. Sometimes AI is required that the joint owners get paid right off the top. There are numerous combinations of these three items that can go into the calculation that says how much each person gets paid. And, and those calculations can be radically different depending on the order that this is paid. So we've gotten really good, but but we weren't as good at temperature some years ago, is defining these terms right at the beginning when a license happens. So this is just something to keep in mind. And also, the last thing I want to say about outgoing royalties, is that amended agreements may have new or different distribution amounts. So if you have a license that you've been distributing royalties on for years, and then that license gets amended, if you add or subtract technology, you're adding or subtracting an inventor mix, and which is likely to be different. And so you have to redo once you set up a distribution of royalties on a license, it's pretty easy to just keep doing the same thing over and over again. But as soon as you amend it, you have to start from the beginning point again, because you probably have a different mix of inventors, if you've changed the mix of technology on on a given license. And then I think we had our last slide, but we're not done yet. There are just sort of a grab bag of other issues that I couldn't throw into any one category like equity or reimbursements, portals and no product or service. If you've ever been or when you go to an in person automating you will find that portals are the bane of finance people's existence. And all portal is, is when you set up a license agreement with someone, you tell them we're going to send you an invoice for your license fee. And you can pay that they say great, send it to us. And you do that. And you get an email bounced back that says oh, we use an online portal payment system to process invoices. Here's a link, you'd have to create an account for yourself, and then you can submit invoices that way, and it's the best way for the debate. The problem with these online portals is that they ask you a series of questions. And those questions are trying to determine whether you're selling a product to the licensee which are not because we're licensing technology, or if you're providing a service like a law firm or an accounting firm, which we're not we're licensing IP. And so I would say at least a third of the time, when one of our licensees uses a portal system, they have to go in and set up an exceptional login just for me. Because the six the portal itself won't allow me to move forward because the questions don't make sense. Because I'm not selling a product for example to them. So that's something to keep in mind. If you find yourself frustrated by a portal, you are in very good company, it happens to all of us. Wires when they come into your institution have almost no little or no information on them. And so And because we're not finance department employees, they're not coming to us or coming to an independent person on campus. So we always we put on our invoices and we always try to ask people to reference technology transfer for example, even referencing your invoice number isn't helpful because if you have a four digit invoice number and so do other departments on campus, it doesn't really tell anyone that that money is for you. But if it says tech transfer, if the wire mentions to transfer if it mentions royalty or something like that, then you The people receiving wires can at least find you. When you receive a check, or you're notified of a wire, and it doesn't make sense, you can't figure out why your licensee would match you, it's probably for different departments, you may not be the only department that's receiving money from a particular entity. So that's something to keep in mind. And other departments, conversely, may claim your wire or may deposit your check. And so what happens is, while here, I think there's the next one is pay is paying the same wire or physical address as the last time they paid your institution. So what happens is this, someone will make a an annual minimum royalty payment to me. And the next time that they pay Caltech, they're really paying sponsored research. But I get the check, because I was the last address they use. So I send that sponsored research. And they contact them and say, Oh, hi, for these kinds of payments, please use this address, and the licensee changes the address to them. And then the next time they pay my royalty payment, it goes just not to research. So and that happens with wires as well, where they'll just use the same information they did the last time. So things bounce back and forth, and back and forth. Another thing that's fairly common for all of us is we'll put in our license agreements, when paying us please use this address information. The in each and every invoice also says please pay this address. But for some reason, the licensee will go in online, they'll find the address of the Bursars office of our institution and located versus office, that's really common. So if you penalize V, and say, hi, we haven't received payment for this, could you give me an update, please. And they said, we already paid you, they may very well have sent it to your virtual office. So that's, that's certainly something to keep in mind. Most departments on most university campuses do not share contact information with each other. This is an issue that comes up when you're trying to pay inventors, if they either worked on your campus, or they graduated from your campus, or both, they may notify the Alumni Association, they may notify human resources that they've moved. But they don't tell you. It's taking years to train some of our inventors to notify our department when they move. And, and I used to be frustrated that other departments don't share that information. But it turns out, nobody does. It's a really common thing across all universities, departments don't share contact information. So that's something to keep in mind. I also suggest that when you get an agreement, a license agreement that you're setting up in your system, whatever system you use, that you read the agreement all the way through. And not just the billing terms, because billing terms can sneak in and unexpected paragraphs, we've been around so long that this rarely happens anymore. But it can still happen where instead of so I don't just go to the billing terms that I know are in our license agreements, I scan the whole thing for dates or numbers of any kind. Because every once in a while in money term, a financial term, can find its way into a part of the agreement where it usually isn't so

Speaker 2  33:12  
much. Oh, another thing is when you are correcting mistakes in your enterprise system, we use Oracle, lots of issues Oracle, what you want to look at is the fiscal month and year rather than the date of the transaction. And I put below that ditto purchase orders that have the same date, but the fiscal month is different. So what's really common in these enterprise systems that are institution views is, for example, if a purchase order is used to pay a law firm, the date of every transaction for that payment, it has the same date, and it can be in a different year, you know, March of 2018, march 2 2018 can be the same date. But if you look at the fiscal month and year that's listed in your system, that is always correct. So what I want to say about enterprise systems is when you're downloading or looking at information for your department, with fiscal month and year is always correct. The date is usually correct, but not necessarily. And what can happen is, let's say it's the last month of your fiscal year. And you want to go in and make some corrections. One of your royalty income numbers was miscategorized or was put into the wrong account, an issue that can come up and if you correct a deposit, the correction shows up in the month that the correction was made, and that can bleed into your next fiscal year. So we what you have to do is make side notes basically, that says how what was in what fiscal year and why the numbers don't match. It can be an issue. And then the last thing that I would recommend, oops. The last thing I would recommend is downloading your Oracle your enterprise As information to your hard drive, and putting it in FileMaker, or access, or Excel FileMaker, and access or database programs, and then Microsoft Excel we all use. And I stopped using Excel for this because my department's been around for so long that there are 10s of 1000s of rows, but of information. But if you put that into FileMaker, or access, you can instantaneously search all of the transactions on your department. And here's why this is helpful. Logging into an enterprise system for your institution, like like Oracle is almost always really slow. And it's hard to search for everything, they usually require you to put in a specific account and a specific date range. And if your transaction happened, accidentally not on that account, or happens just outside of that date range, it doesn't come up. But if you've downloaded the entire history for all time for your department, you can instantaneously search all of your records. And I've I've found it very useful and very helpful. In my time, you just look really quickly. So all of this is the last slide. And I know that I spewed a lot of information, and the newer you are the tech transfer, the more overwhelming it probably was. So please, if you have any questions, ask them. Because if you have a question, almost certainly somebody else has a question. And we're only 36 minutes into it, we certainly have the time to go over any questions that anyone may have.

Speaker 2  37:06  
Okay, so someone's asking, how do we going back to tracking for example, when I create reports, of the monies that come in, and someone wants to know, which of those was foreign money, how much of it was foreign money, or how much of it was for equity, what I keep is a shadow spreadsheet. And so basically, I enter everything in my department's database like I were supposed to. But I also keep a completely independent and separate Excel spreadsheet. And that has all of our transactions. And then to the left of each of those transactions are columns. So there's a column it says foreign or not. And I just put an x in that if it's foreign equity that we sold is one column and equity that came to us directly from the licensee is another column. And so putting all of our transactions as I put them in our database, I also entered them in this spreadsheet. And then it's very easy to use Excels filtering feature on the data tab to get for example, just equity transactions that are foreign money. For example, that's not one of the reports. But if you if you use a I guess you would call it a shadow spreadsheet, that that makes it easier to keep track of items like that. But you have to know in the first place, what what kinds of reports or what information is going to be asked of you. And and it can take a full year to really get an idea of who's going to ask you for what. So I hope that answers now.

Speaker 2  39:10  
So many is asking, Can you give an I'm sorry, I don't see who can you give an example of the CIP and Limbo payments is this when you receive a payment for an option agreement, and you hold it until the option expires? So you know how to distribute the payment, or recover fees versus payout? It's not, but that's a really great question. So let me talk about your option. First, the option agreement that you mentioned first, we would typically have to decide how you want to handle this but but it's not unusual when you have an option agreement that that there are already legal expenses incurred for that technology. And so we would not we would deposit that money in a way, because you have to deposit the check or the sale date, we would deposit that money in a way that the money goes entirely to the institution. Because one of our many rules for distributing money to Ventures is we have to make ourselves whole first. So if there are outstanding legal expenses, then then we're not going to distribute royalties on that. The thing that I was talking about is there's a a large entity that sends this money, and they're supporting an invention or not. So we hold on to that money for a year, we call it our holding account, this limbo accounts. And it just sits there not being categorized as income or liability. And at the end of the year, if an invention comes out of the work that they've that they've paid for, we share some of that money with the inventors. And if there's not an invention that comes out of that, then we share money with the lab itself. But it was it is a really weird thing to to hold on to money for any amount of time. And for me it was and not categorize it as something as income or as a liability. So oh, it's Jessica. Jessica asked that question. If that's not clear, please go ahead. And and let me know. And I'll try and explain it different ways. Christian is asking, how do you keep track of finances from multiple technologies connected to various agreements? How do you keep track of finances? from multiple technologies connected to various agreements? So each of our if I understand your question, each of our we have our own proprietary database. And, and so each licensee gets its own agreement in our database. And each licensee we list the technology that's on that agreement. And then, so we would track it by money that comes in per agreement, rather than that, then that comes in per technology. And I feel like I'm not answering your question, but I wish I could see, I wish I could hear your voice instead of reading this. So we would track it by by that. It's, it's possible you. So you may not know it depending on how new you are. Anyone listen to this technology transfer to tech transfer, you can license the same technology to different companies. And either that, either it's not exclusive for for it. So you have two companies that are licensing exactly the same technology that's either non exclusive for both of them, or you can license it exclusively to each of them, but in different fields. So if it's a GPS system, for example, one company exclusively can use it for oceanic sea water use, and the other for aviation use, for example. And so if we had that, we would have two separate license agreements. And we would track the money that came in on that technology, per the licence fee, rather than per the technology, if that makes sense.

Speaker 2  43:09  
Christina is asking, Is it common to have a policy around when equity is sold? Yes. And I encourage you to ask that in the in person gatherings that we do in autumn. So our policy I'll just tell you is not to hold on to equity, that as soon as we are legally able to liquidate equity, we we let it go. But that's different across all institutions. And this is worth noting, it's rare, but some institutions actually parcel out equity shares to their inventors, which is an enormous amount of paperwork. Most of us don't do that most of us hold on to the equity ourselves. And then when we liquidate it, we send money to inventors, but we don't issue them the shares. So you can do that either way. But our policy is to cash in equity as soon as it's possible for us to do that.

Speaker 2  44:28  
Holy my scroll bar on the questions disappeared. So there were four of them. And now there are none of them. So I don't know if I don't know what just happened to the questions.

Speaker 1  44:40  
As they're being answered, I'm marking them off as answered. Oh, we don't have any current question. Sure. Sure. We don't have any current question. So if anybody listening does have any questions while we've got Lauren's on the line, go ahead and use that q&a box. We'll give him maybe a couple more minutes Lawrence and then Okay, and then we'll go ahead and close it down.

Speaker 2  45:03  
Let me look through my notes and see if there's something else I wanted to say.

Speaker 2  45:19  
Christian is also asking, What about the expenses related to the technology connected to two different agreements, we tend to hammer that out in the license agreement itself. So and it's, it's a case by case basis. So you could have a situation where, especially if they don't get licensed at the same time, where one licensee is already paying for the expenses, sometimes they share them. Sometimes they know of each other. And they they agreed to share the expenses, 5050 or 7030, you can set it up any way that everyone agrees to. And in fact, I've seen several different combinations of how expenses are paid on technology that are licensed by different entities at the same time, what what also can happen, just so you know, is that something can be licensed for a while, and expenses are paid on it for a while, and then that licensee goes under, and then the technology goes to a new licensing. And so you have to hammer out, are they is that new licensee going to pay for the leftover expenses from the other company that went over that went under? Or are they just starting to pay expenses from the date of the license forward? It's there's there are numerous different combinations. And I hope that helps.

Speaker 2  47:09  
You may also have to track when you're taking monies, another item that can come up. There aren't many of us that fall under this circumstance with Caltech certainly does. Contact also manages NASA's Jet Propulsion Laboratory. And we have agreements for them as well. So another category along with foreign or equity or whatever another category of money that I have to keep track of is whether the initial reason that came to us was because of the Caltech agreement, or because of the JPL agreements. So you may have more than one entity that you have to keep track of. And then there are a whole separate group of people that have their own reporting needs. And they they may want to know specific things. And that just that just sort of adds to the mix. It's something to be aware of, but it's a possibility.

Speaker 2  48:02  
Should we click? Would it help? I don't know if it was it helped to click through some of the just to review some of the things in the slides. So we talked about burden funds, rolling accounts, or spending accounts. Andrea is asking, have you covered all of the hurdles experienced in communicating with non GGO employees across campus? Any other any other cases to share? There are so many hurdles, I would say no, I probably haven't covered all the possibilities. So the biggest issues that have come up for me in communicating with the finance department is the wording things they call revenue, for example, that I call reimbursements. Or going through the process of this equity that they sold and deposited versus it coming directly to us from a licensee. They especially newer people don't realize the importance to the tech transfer office of using that comment field. And so they'll they'll abbreviate things or they'll abbreviate what I've written. And, and so when I go to search for my thing that I've written, it's not there. I always ask them to change that so that I can find what I'm looking for. I will say this. I have a very chummy relationship with our finance people and I recommend getting very friendly with them. Because at some point, you're going to need their help. Someone's going to need an emergency check or something's going to have to be paid and and the cheerier friendlier terms you are on with your finance people that better and ours are really great. They're super easy to work with. But they are, I would say more critical to the tech transfer smooth running of the finance function than many The tech transfer office has realized. So and also it's better to communicate on the phone with them, rather than on email, emails, great, but having verbal conversation with them. And also I even do this I will occasionally take, I'll have I'll spend my lunch, we'll spend lunch hours together, it's, it's, I think it's really important to build some kind of interpersonal face to face relationship with your finance department employees with the key people that you'll find that you work with over and over again, so that they have a face with your name. And ours, it's not unusual to have them on a very separate building separate part of campus, you literally don't see each other. But it's good to get that face to face time, so that they know who you are. And I think those are the communication issues I'm trying to think of, if there's been anything else that's come up.

Speaker 2  51:01  
Ours are people are very good at calling me and asking me when things happen. For example, if they get large wires are often for my department. And so I get phone calls for those that are really good about communicating. I guess you just want to set up a situation so that they are always happy and comfortable to call you or to reach out to you would be my advice.

Speaker 2  51:31  
Annie is asking, Will there be an advanced course offered? There could be I haven't put one up, but I think you can. Is it Holly? Do they let you know? And then for example, someone could it doesn't have to be me. But but there are topics for example, equity is something that you could do a whole presentation on. Reporting or enterprise systems, there's there are several things. Yes, there are advanced courses certainly offered in the in person autumn gatherings. But I would let Holly I guess it's Holly, if you would let me know if there's a specific topic that you would like more detailed information on?

Speaker 1  52:10  
Yeah, absolutely. Just go ahead and reach out to me. And if there's a specific topic suggestion, or if it just, you know, a more general finance on a more advanced level, just reach out to me by email, and we can talk about it and then work on it. With potential speakers. Maybe Lawrence, maybe we'll you know, we'll figure it out. Thanks.

Speaker 2  52:33  
Thank you, Holly. Joe is asking I'm sorry, I don't understand the question. Joe from Houston. If you could maybe rephrase it. It says our salaries royalty payable ever written off? Or does it vary by institution? I don't actually understand that question. Are salaries royalty payable? ever written off? I think I'm misunderstanding because salaries and royalties are completely separate issues for me. They may not be for your institution. So Joe, good, nice if you could rephrase the question I would appreciate.

Speaker 2  53:24  
I will. So what I can tell you while you're typing, if you're typing is if you take out the word salary, salaries are royalties payable ever written off by an institution? If by that you mean we have oil teas to somebody, we can't find them. And then so did we just write off that money? No. When you owe money to anyone co inventing institution or royalty payment to an inventor, you have to pay them and if you can't find them, you every state in the United States, he was cheap the money? Yes, he he he assumed the money to the state that you're in. And then they can go to the controller's office for that state and get the money back. But we never would have to you either have to pay out the money or student you're not allowed to hold on to it. So if I take the word salaries out of your question, that's how I understand that question. But please rephrase it if that doesn't answer it for you.

Speaker 2  54:51  
You're the gal Jessica says Nope, sorry. Joe, again, when an inventor is no longer employed, and the finance department is attempting to pay them and cannot find them, when is the money is cheated those so there is probably someone on your campus who was responsible for his cheating money. And they know the rules around that is cheating funds is a complicated topic that has rules that must be followed. And and what I want to tell you about a student money is the important thing is, if you don't do it within the guidelines, there can be really serious fines, which is why most institutions have a specific employee that does all this cheating for all departments. Let me just read your question when an inventor is no longer employed, undefined terms tend to pay them and cannot find them when somebody's cheated. So there is a specific quote unquote, is cheap person probably at your institution. And they can answer that more more clearly. What I can tell you is you're not allowed to hold on to the money. It's always a steward. And then now to Jessica, speaking of eyedrops Do you write off royalties or reimbursements due to your due to your institute and if so, at what point that's so if you mean, for example, if someone owes us money, and they just stop paying, or they owe us money, and they go under and they can't pay, it's on a case by case basis. So if someone owes us loyalty, like an annual minimum loyalty, or a reimbursement and they're not paying, if they keep not paying, we're extremely startup friendly. So we often will, if we think there's there could happen the convention to that place, we will try to work with them, we try very hard to work with our licensees. But there can come a point where if they just can't pay, or if they're going under, they can't pay it. And and I'm sorry, I wish I could be more helpful. But it's one of those case by case things. Again, we don't have a set amount of time where there's a hard and fast rule that says one year and you're gone for six months, and you're gone. We work with them as much as possible. And then at some point, when they if they do go into we do write them off, one of the things that can affect the decision, I can tell you of how much you work with a different licensee, if there's already another separate different licensee that is certain that they can use that technology. And, and the pie is usually a person who knows that. But for the most part, we we work with our licensees as much as possible, to allow them to be able to pay to us the money that they owe us. And and every single case is different. And you will find that that's true across all tech transfer offices. There's a lot of things that it would be lovely if we could make them cookie cutter. But but they happen on a case by case basis. And that's part of what makes our jobs complicated. So I hope that that answers that question.

Speaker 1  58:27  
Okay, Lars, why don't we go ahead and close it out here. And then if anybody comes up with questions they didn't get an opportunity to answer up. There's one coming in right now. Are you seeing that Lauren?

Speaker 2  58:42  
So Jessica, Jessica is asking, do you have to figure out an allowance for bad debt? Or is that done by your finance team? We don't have to figure that out. So if there are allowances if we even do allowances for bad debts, that is something that our finance department thankfully, handles, we don't have to do that. If you're from a smaller institution, you may have to do that. But but in my case, no. It's my finance department that does it. And I'll tell you from what I've heard in in the autumn gatherings over the years, it's it's always been the finance department that accounts for things like that. Anyone else because Holly's gonna close this down. Jessica says, lucky you explanation exclamation mark. Oh, I guess that means you have to do it. Well good luck to you, Jeff.

Unknown Speaker  59:43  
Thanks for that last question.

Speaker 1  59:50  
Did you have any parting comments Lars before I close this down?

Speaker 2  59:56  
I don't have parting comments other than to say thank you to everyone out I know what the overwhelming scattered amount of information that is, it was intended for people who are brand new. And if you are new and you haven't attended the in person autumn seminars, I highly recommend them. There's a lot of really good information there. And it's not just one presenter, as you get in this webinar format. Other people who have different degrees of experience show up at those. And we also answer each other's questions in person, rather than just one presenter answering all the questions, and we ping ideas off of each other. And it's just it's very good to know that you're not alone in the issues that you're facing. I highly recommend going to the autumn in person seminars. And thank you, Holly, for setting this up for us. I really appreciate it.

Speaker 1  1:00:47  
Thank you, Lawrence. We really appreciate it. So we just want to go ahead and thank you on behalf of autumn, and thank everybody for attending. We hope you found this informational. Please remember to complete the webinar evaluation. We'll be emailing you a link to that this afternoon. This will help us to serve your needs in the future. Once again, we want to thank our annual webinar sponsor Marshall, Gerstein and Borun. And remind all of you that a recording of this webinar will be available for viewing within about two weeks of today's date. Access to this recording is included in your registration feeds, and you can visit the audit website to view that recording or if you want to purchase a past webinar or you might have missed this we'll go ahead and conclude our program for today. Thanks for joining us and have a great afternoon.

Transcribed by https://otter.ai