Patent Application

IN THE UNITED STATES PATENT AND TRADEMARK OFFICE

 

INVENTOR:              JOHN LEGARÉ WILLIAMS

 

TITLE:                        SYSTEM AND METHOD FOR PROCESSING AND

                                    DYNAMICALLY SEGREGATING BUSINESS ASSETS

 

 

SPECIFICATION

 

BACKGROUND

 

FIELD OF THE DISCLOSURE

The present disclosure relates to a system and method for protecting business assets through dynamic segregation of business assets and liabilities.  More specifically, the present disclosure relates to a system and method for dynamically forming, funding, maintaining and terminating cells within a Series Limited Liability Company or any other form of a protected cell company.

 

RELATED ART

A Series Limited Liability Company (“Series LLC”) is a form of a limited liability company where the assets of each series of a Series LLC are protected from liabilities arising from the other series therein.  Each series (“Cell”) of a Series LLC can own distinct assets, incur separate liabilities, contract in its own name, have its own Operating Agreement, and have different managers and members, but only the Series LLC (and not each series therein) must file a single certificate of formation and pay a single annual state fee in the state of formation, regardless of the limitless number of series therein.   

 

            Despite the advantages (e.g., unlimited asset segregation potential, cost savings, etc.) of a Series LLC, especially compared with a similarly structured set of separately formed traditional LLCs, there are still a number of contract costs and administrative burdens associated with forming, maintaining, and terminating separate Cells in a Series LLC.  Current systems require an arduous process of drafting, and having members sign, “separate series agreements” to form, fund, and terminate Cells of a Series LLC.

 

            Therefore, there is a need for a system and method that can dynamically form, fund, and terminate Cells easily and efficiently. 


SUMMARY

            The present disclosure relates to a system and method for forming business or asset holding Cells.  More specifically, the system allows a user to define and create one or more Cells, and then (manually or automatically) assign assets and/or liabilities to the one or more Cells.  The system provides (automatic or manual) asset/liability population, characterization, information access, Operating Agreements, and alteration.  The system receives asset information and/or liability information (in real-time), and automatically updates (in real-time) information across one or more Cells.  A user can track any changes made to the Cells, identify and analyze profitable areas of a business, and spin off, cut off, or add on Cells.

 

 


BRIEF DESCRIPTION OF THE DRAWINGS

The foregoing features of the disclosure will be apparent from the following Detailed Description, taken in connection with the accompanying drawings, in which:

 

            FIG. 1 is a diagram showing the system of the present disclosure;

 

            FIG. 2 is a flowchart showing overall processing steps carried out by the system of the present disclosure;

 

            FIG. 3 is a flowchart showing in more detail a processing step of FIG. 2;

 

            FIG. 4 is a flowchart showing processing steps for managing assets and/or liabilities in real-time;

 

            FIG. 5 is a flowchart showing the processing steps for managing products in real-time; and

 

FIG. 6 is a diagram showing hardware and software components of a computer system capable of performing the processes of the present disclosure.

 


DETAILED DESCRIPTION

            The present disclosure relates to a system and method for forming business entities, as discussed in detail below in connection with FIGS. 1-6.  

 

            As described in more detail below, the system and method can take individually identifiable assets, dynamically assign those assets to a particular Cell, create a record of that Cell, and treat those assets as separate from other business assets in the same Series LLC.  This automates the process of creating Cell Operating Agreements, which could be stored electronically to document the creation and record of that Cell.  The members of the Series LLC could further designate ownership interests in Cells therein with multiple tiers of owners who do not need to be mirror images of other Cells therein. While Operating Agreements or Cell agreements could be verbal or written, they could also be electronic and determined by the system (e.g., by a predetermined algorithm, dynamic algorithm, etc.) to assign ownership and management structures in real time. This granularizes a business into all its component parts where each part of the business is in a separate Cell.  In other words, the system separates a business into Cells that have rights tantamount to free-standing entities.  However, these Cells work together and can interact with each other. The system and method manage an unlimited number of component parts of an enterprise, whether active or passive, tangible or intangible, thereby making the Series LLC streamlined, organized, and easy to use.

 

            The system of the present disclosure allows a user to define and create one or more Series Limited Liability Companies (Series LLCs) having one or more Cells, and then (manually or automatically) assign membership, management, assets, and/or liabilities to the one or more Cells.  The system provides (automatic or manual) asset/liability population, characterization (e.g., description), information access, and alteration.  As discussed below in more detail, the system receives (in real-time) asset information (e.g., inventory information) and/or liability information, and automatically updates (in real-time) information across one or more Cells.  A user can track any changes made to the Cells, identify and analyze profitable areas of a business, and spin off, cut off, or add on with or without Secretary of State filings.  Further, Cells can be backdated to be retroactively funded as assets or liabilities are acquired, funded from when they were acquired, or they can be future dated to when they expect to be acquired.  The system can also designate membership, management, and terms to particular Cell agreements.

 

            The system allows users to isolate assets and/or liabilities (or their component parts) and track and organize them.  Assets and/or liabilities can be isolated as geographic territories or items, and then assigned to a series.  Tangible and/or intangible assets and rights can have their own Cells (e.g., employees, orders, customers, contractors, pieces of equipment, types of inventory, pieces of inventory, etc.).  Contracts can be isolated so that each item or product (e.g., bought, sold, held, watched, etc.) can be isolated and have its own Cell. This is regardless of whether the item of a company or contract is a product, service, natural object, or man made object.  Anything that can be geolocated or identified and tracked can have its own series, such as inputs, elements (e.g., structural, design, mechanical, electrical), shares of stock, pieces of artwork, derivative contracts, component parts (e.g., component parts of intellectual property), etc. 

 

            The system could be used by any type of user, company (e.g., selling products or services, holding assets, manufacturing, trading, etc.), or other organization (e.g., business, non-profit, non-government organization (NGO), individuals, partnerships, entities, governments, etc.).  For example, the system could be utilized by lawyers to track only a portion of a company’s assets (e.g., if the lawyer is responsible only for assets assigned to a particular series) or by investors to invest in only a portion of a company’s assets (e.g., only those assets assigned to a particular series, only those funds which are linked to specific series, etc.).

 

            FIG. 1 is a diagram showing the system of the present disclosure, indicated generally at 10.  The system 10 comprises a computer system 14 (e.g., a server) having a user interface engine 16 and a Series LLC and Cell management engine (module) 18 stored therein.  The system 14 is in electronic communication with one or more databases, such as an asset database 20, a liability database 22, and/or a Series LLC and Cell database 24.  Each database could be stored on the computer system 14, or located externally (e.g., in a separate database server in communication with the system 10).  As will be discussed in greater detail below, the Series LLC and Cell management engine 18 allows users to electronically create and manage Series LLCs and Cells, as well as assets and liabilities thereof.

 

            The computer system 14 could be any suitable computer server (e.g., a server with an INTEL microprocessor, multiple processors, multiple processing cores) running any suitable operating system (e.g., Windows by Microsoft, Linux, etc.).  The computer system 14 includes non-volatile storage, which could include disk (e.g., hard disk), flash memory, read-only memory (ROM), erasable, programmable ROM (EPROM), electrically-erasable, programmable ROM (EEPROM), or any other type of non-volatile memory.  The Series LLC and Cell management engine 18, discussed in greater detail below, could be embodied as computer-readable instructions stored in computer-readable media (e.g., the non-volatile memory mentioned above), and programmed in any suitable programming language (e.g., C, C++, Java, etc.).

 

The system 10 can communicate through a network 26 with one or more servers, users and/or devices.  Network communication could be over the Internet using standard TCP/IP communications protocols (e.g., hypertext transfer protocol (HTTP), secure HTTP (HTTPS), file transfer protocol (FTP), electronic data interchange (EDI), etc.), through a private network connection (e.g., wide-area network (WAN) connection, e-mails, electronic data interchange (EDI) messages, extensible markup language (XML) messages, file transfer protocol (FTP) file transfers, etc.), or any other suitable wired or wireless electronic communications format.

 

The system 10 could be web-based and could allow for remote access to the system 10 over a network 26 (e.g., Internet, WAN, LAN, etc.) by one or more devices, such as a personal computer system 28, a smart cellular telephone 30, a tablet computer 32, or other devices.  It is also contemplated that at least some of the functionality of the system 10 could run locally on devices (e.g., personal computer 28, smart cellular telephone 30, tablet computer 32, etc.) programmed with software in accordance with the present disclosure.  Further, the system 10 could communicate with an inventory management system 34 (to receive therefrom and/or update information therein regarding the inventory of a Series LLC and/or Cells therein), an investor computer system 36 (to receive therefrom and/or update information therein regarding the valuation of an asset or group of assets of a Series LLC and/or Cells therein), and/or a government computer system 38 (to receive information therefrom and/or update information therein regarding regulatory filings or other reporting requirements of a Series LLC, Cells, and/or assets therein).  Further, as discussed in more detail below, the system 10 could communicate with a barcode scanner 40 or other similar device that uniquely identifies products.

 

            FIG. 2 is a flowchart showing overall processing steps 50 carried out by the system of the present disclosure.  In step 52, the system electronically presents one or more user interface screens to a user.  In step 54, the system receives asset and/or liability information, such as from the user (e.g., remote user), an inventory management system, an investor computer system, and/or a government computer system.  Then in step 56, the received asset and liability information is used to populate an asset database 20 and liability database 24.  In step 58, the system obtains Cell creation/alteration parameters 60 as input from the user.  The Cell creation/alteration parameters could include the name of the Cell, name of the business as a whole (e.g., parent business), designation of the class(es) of assets to be assigned to the Cell, description of the characteristics (e.g., outer limits) of each Cell, naming convention (e.g., descriptive, non descriptive, encrypted, etc.), determination of Cell management, approximation of series number, description of contents of series, etc.  However these parameters could also be determined automatically by the system instead.

 

            In step 62, described in more detail below in FIG. 3, the system 10 processes the user-defined parameters, the asset database information, and the liability database information using the Series LLC management engine to create/alter a Cell record.  If a new Cell record is created the system could be requested to generate an Operating Agreement for the new Cell.  In step 64, the Cell record is stored in the Series LLC and Cell database 26.  In step 66, the system determines whether a report should be printed for filing (e.g., filing with the state departments).  Each state has its own rules regarding the formation and reporting requirements of a Series LLC, although the state of incorporation governs the internal affairs, such as Delaware, which allows Cells to be set up without additional filing fees.  The system can compile those rules and automatically create the documents needed for filing to comply with state regulations.  In this way, the system makes a determination when a series is created/altered as to the regulatory and/or tax impact of the series and any licensing and/or reporting requirements, outputs the results to the user, and creates an Operating Agreement for the Cell and any required paperwork for filing.  If a positive determination is made in step 66, then the process proceeds to step 68, and the report is printed. Otherwise the process ends.

 

            FIG. 3 is a flowchart showing in more detail step 62 of FIG. 2.  More specifically, shown is a flowchart showing the steps for processing user-defined parameters, asset database information, and liability database information using the Series LLC and Cell management engine to create a Cell record.  In step 84, parameters for the Cells are defined (e.g., number of Cells) and processed, including defining and processing geographic locations.  For example, for a national store, all of the zip codes in the country could be entered so that each series has its own zip code, and conversely each zip code has its own series.  Any asset or liability geographically located in a particular zip code could be added to a particular series for that zip code.  Additionally, new Cells or classes of Cells could be added or subtracted based on the processed information. 

 

            Then in step 86, assets that have matching parameter information (e.g., zip codes) are retrieved from the asset database 20.  In step 88, the retrieved matching assets are assigned to a Cell record.  In step 90, liabilities that have matching parameter information (e.g., zip codes) are retrieved from the liability database 24.  In step 92, the retrieved matching liabilities are assigned to a Cell record.  In step 94, a determination is made as to whether there are any additional assets and/or liabilities.  If so, the process proceeds to back to step 86.  Otherwise, the process ends.  In some situations, the system could automatically wind down or terminate a series based on the processed parameters and/or user input.

 

            FIG. 4 is a flowchart showing the processing steps 100 for managing assets and/or liabilities in real-time.  In step 102, the system receives, in real-time, asset (e.g., inventory) or liability information for a particular Series LLC and/or Cell, such as from a third party computer system.  In step 104, the system determines whether the asset or liability falls into an existing Cell of a Series LLC.  If not, the process proceeds to step 106, and the system creates a new Cell record for the asset or liability and generates an Operating Agreement for the new Cell.  In step 108, the asset or liability is assigned to a new Cell record.  Then in step 110, the Series LLC and Cell database is updated with the new Cell record.  If, in step 104, the asset or liability falls into an existing series, the process proceeds to step 112, where the system retrieves the matching Cell record from the Series LLC database 36.  In step 114, the system assigns the asset or liability to the Cell record.  Then in step 116, the Series LLC database 36 is updated with the revised Cell record.

 

            FIG. 5 is a flowchart showing the processing steps 120 for managing products in real-time.  In step 122, the system electronically receives, in real-time, unique product information (e.g., unique product identifier), such as from a bar code scan or serial number (automatically electronically transmitted or manually entered by a user).  In step 124, the system determines whether the product falls into an existing Cell of a Series LLC.  If not, the process proceeds to step 126, and the system creates a new Cell record for the product and generates an Operating Agreement for the new Cell.  In step 128, the product is assigned to a new Cell record.  Then in step 130, the Series LLC database is updated with the new Cell record.  If, in step 124, the asset or liability falls into an existing Cell of a Series LLC, the process proceeds to step 132, where the system retrieves the matching Cell record from the Series LLC and Cell database 36.  In step 134, the system assigns the product to the Cell record.  Then in step 136, the Series LLC and Cell database 36 is updated with the revised Cell record.  For example, a store (e.g., drug store) can track assets (e.g., products) in a series by bar codes or other unique identifiers. 

 

FIG. 6 is a diagram showing hardware and software components of a computer system 200 of the present disclosure capable of performing the processes discussed above.  The system 200 comprises a processing server 202 which could include a storage device 204, a network interface 208, a communications bus 210, a central processing unit (CPU) (microprocessor) 212, a random access memory (RAM) 214, and one or more input devices 216, such as a keyboard, mouse, etc.  The server 202 could also include a display (e.g., liquid crystal display (LCD), cathode ray tube (CRT), etc.).  The storage device 204 could comprise any suitable, computer-readable storage medium such as disk, non-volatile memory (e.g., read-only memory (ROM), eraseable programmable ROM (EPROM), electrically-eraseable programmable ROM (EEPROM), flash memory, field-programmable gate array (FPGA), etc.).  The server 202 could be a networked computer system, a personal computer, a smart phone, tablet computer etc.  It is noted that the server 202 need not be a networked server, and indeed, could be a stand-alone computer system.

 

The functionality provided by the present disclosure could be provided by a Series LLC and Cell program/engine 206, which could be embodied as computer-readable program code stored on the storage device 204 and executed by the CPU 212 using any suitable, high or low level computing language, such as Python, Java, C, C++, C#, .NET, MATLAB, etc.  The network interface 208 could include an Ethernet network interface device, a wireless network interface device, or any other suitable device which permits the server 202 to communicate via the network.  The CPU 212 could include any suitable single- or multiple-core microprocessor of any suitable architecture that is capable of implementing and running the program 206 (e.g., Intel processor).  The random access memory 214 could include any suitable, high-speed, random access memory typical of most modern computers, such as dynamic RAM (DRAM), etc.

 

 Having thus described the system and method in detail, it is to be understood that the foregoing description is not intended to limit the spirit or scope thereof.  It will be understood that the embodiments of the present disclosure described herein are merely exemplary and that a person skilled in the art may make any variations and modification without departing from the spirit and scope of the disclosure.  All such variations and modifications, including those discussed above, are intended to be included within the scope of the disclosure.