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Method of Financing Small Business Through and Support of Entrepreneurship Through Charitable Alliance

Method of Financing Small Business Through and Support of Entrepreneurship Through Charitable Alliance

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Published by Chris Ryan

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Published by: Chris Ryan on Mar 28, 2011
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04/01/2012

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Method of Financing Small Business and Support of Entrepreneurship Through Charitable Alliance
United States Patent Application 12/985330Chris RyanWilliam BreckJulie ButlerDecember 6, 2010
ABSTRACT
Small businesses are the backbone to “The American Dream” and the Americaneconomy, they are responsible for more than 65% of the United States GrowthDomestic Product (GDP), and represent our country’s greatest chance of creatingnew employment for Americans. Unfortunately, access to capital and the capitalmarkets is limited to these ventures which are the cause of more than 90% of allsmall business failures.501(c)(3) and other qualified charitable organization are also suffering from therecession in a term known as “Donor Fatigue” which has caused an across theboard drop in donations. Charities need to find a new instrument of value above atax deduction to offer a new market driven value proposition to donors in order tobe successful in new fundraising initiatives.Method of financing a small business and support of entrepreneurship throughcharitable alliance is in support of furtherance of a business objective of the forprofit small business while simultaneously offering advantages to the nonprofitcharitable organization. It is a mechanism whereby a small business gifts a certainamount of shares of its issued common stock capital and the nonprofit enters intobusiness development agreement with the small business to arrange for the smallbusiness to be a registered reporting company under section 12(g) of the SecuritiesAct of 1934. Simultaneously with the gifting of stock by the small business thenonprofit issues to the small business a deferred purchase agreement (DPA) topurchase a predetermined amount of the small business preferred stock capital on
 
certain date. This DPA being conditioned with a successful conclusion of the non-profit directed business development initiatives.The non registered common stock capital of the small business gifted to thenonprofit is then placed in a segregated escrow account. The nonprofit then beingan exempt SEC INSERT then can issue and sell single stock futures contract (SSFC)representing rights to purchasers the underlying securities gifted by small business,to charity in the future for a certain predetermined delivery price which isdetermined prior in the SSFC.The initial premiums raised by selling the SSFC(s) is then passed directly to thenonprofit, which then executes a business development initiative on behalf of thesmall business to increase the value of the underlying common stock in the SSFC.The purpose of this is to increase the value of the common stock capital to be morevaluable than the delivery price of the SSFC when the contract becomes due.Among other business development initiatives the nonprofit would assist the smallbusiness in being eligible to file a registration statement S-1 with the Securities andExchange Commission. This would include: fine tuning the business plan;developing and implementing revenue generating systems and procedures; marketresearch assistance; identification of strategic alliance and joint venture partners;protection of intellectual property; developing a revenue recognition policy;developing an accounting system and internal controls necessary to be withincompliance with (Insert) MORE; and other needed implementation identified.Purchasers of the Single Stock Futures Contract also enjoy that the tacking of theirinvestment for Fair Market Valuation purposes under Internal Revenue Code1234(b) starts on the day the initial contract premium is paid.Upon the small business having a class of equities registered under Section 12(g) of the 1934 Act, and a trading symbol, the nonprofit can approach purchasers of theSSFC to take pay the additional money to take delivery of the stock underlying theSSFC.The additional premium collected by the purchasers taking delivery of SSFC ispassed to the Charity, who then purchases a certain amount of the small businesspreferred stock as identified in the Deferred Purchase Agreement.
 
The small business receives the benefit of business development, and an equitybased infusion of capital (preferred stock purchase by non profit)The nonprofit becomes the owner of a certain amount of convertible preferred stockin a publicly traded company.The purchaser of the Single stock futures contract decided to take delivery of the of the underlying stock due to market value of the stock being more valuable than thedelivery cost. 
CLAIMS
1. A method of financing small business development initiatives.2. A method of providing equity based financing to a small business.3. A method of providing hybrid based financing to a small business.4. A method of supporting a mutually beneficial alliance between a nonprofitand a small business.5. A method of supporting a mutually beneficial alliance between a nonprofitand a small business, outside the context of a tax deduction.6. A method of supporting a mutually beneficial alliance between a nonprofitand a small business, outside the context of a tax deduction.7. A method of receiving common stock donation from non publicbusinesses.8. A method of placing common stock donated in a segregated escrowenvironment9. A method of issuing single stock futures contracts against common stockplaced in segregated environment10. A method in supporting a charity in developing a small businessenterprise.11.A method of supporting a charity in having the rights to purchase stockcapital of small business in the future.12. A method of supporting a charity in having the rights to purchasepreferred stock capital of small business in the future.

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