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UTK has customers who form strategic alliances with them. That means the customer pays UTK a retainer fee each month to look for technoilogy that the customer might be interested in licensing. If they find it, say at a university, UTK forms a subsidiary company which licenses the product or technolgy. Then UTK does a stock swap with their customer in which they swap all of the shares of their subsidiary company for stock, (or sometimes cash), in their customers company.

They value the stock at a discount of 35 % from market, realizing that it may be tough to sell. They agree to hold it for a year. They thus have a huge stock portfolio, like a mutual fund.

Their earnings last quarter were huge, and this quarter will be huger still. They have signed 9 new alliances already this quarter and have done about 7 or 8 technology transfers so far, beating the record, which was last quarter.

Hope this helps
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