2. Corporate & Legal Structure

Formation & Governance

Local Care Systems Inc DBA Local LifeCare was incorporated as a Delaware C-Corporation in October 2025, establishing a clean, investor-ready foundation commonly used by high-growth technology companies. The headquarters are located in Tacoma, Washington, with operations structured for multi-state expansion.

The company operates under founder-friendly but professionalized governance:

• Bylaws formally adopted at incorporation
• Clear authority structure for issuing equity and appointing officers
• Quarterly board meetings with documented minutes
• Written consents executed for major decisions (equity issuance, officer roles, adoption of ESOP, etc.)

This ensures Local Care Systems Inc DBA Local LifeCare maintains proper legal recordkeeping and remains diligence-ready as it enters growth stage financing.

Cap Table (Fully Diluted – Pre-Financing, Founders & ESOP)

Shareholder	Ownership	Notes
Kenneth Lyman — Founder, CEO & Chair	65%	Founder common stock; long-term controlling interest
Mia Padilla — Chief Growth Officer & Corporate Secretary	25%	Founding executive common stock
Jason Dierks — Chief Financial Officer & Treasurer	5%	Early executive common stock
Employee Stock Option Pool	5%	Reserved under 2025 Incentive Plan
Total	100%	Fully diluted capitalization

As of today, we have no outstanding SAFEs, convertible notes, or preferred equity. Our capitalization consists only of common stock held by founders, early executives, and the employee option pool.

Board of Directors

Local LifeCare's board reflects the company's early formation stage and founder-driven leadership:

• Kenneth Lyman — Chair & CEO
• Mia Padilla — Director & Corporate Secretary
• Jason Dierks — Director & Treasurer

The board meets quarterly and formally approves:

• Financial updates
• Strategic initiatives
• Equity matters
• Operational milestones

All minutes and written consents are maintained in an organized, centralized corporate record.

Equity & Stock Option Plan

A 5% Employee Stock Option Pool was created under the 2025 Incentive Equity Plan to attract early technical, operational, and commercial hires.

Key points:

• Standard 4-year vesting with 1-year cliff
• Options issued only upon board approval
• 409A valuation scheduled for Q1 2026, ensuring compliant strike prices for early employees
• Plan designed to scale through Series A without immediate expansion

This structure provides competitive equity incentives while maintaining clear founder control and long-term alignment.

Intellectual Property & Proprietary Assets

Planned IP Strategy (Post-Funding)

With seed funding, Local LifeCare will implement a comprehensive IP protection strategy:

Months 1-3 Post-Funding:

• Trademark Filings: File "Local LifeCare™" word mark and logo with USPTO
• Domain Protection: Secure additional domain variations and extensions
• Initial Patent Strategy: Engage IP counsel to evaluate patentable innovations

Months 3-6 Post-Funding:

• Provisional Patents: File applications for AI-driven adherence prediction and intervention algorithms
• Trade Secret Documentation: Formalize protection of proprietary workflows and processes
• International Filings: Initiate trademark protection in key expansion markets

Budget Allocation: ~$30,000 from the $120,000 legal/compliance budget

Core Value: While formal IP protection is pending, the company's most valuable intellectual property is embedded in its operational model, technological workflows, and behavioral algorithms that enable software-like economics

Proprietary Trade Secrets

Local LifeCare maintains and protects several core proprietary systems:

Adherence Intelligence Engine

• Behavioral logic that adjusts timing, pacing, and frequency of medication reminders and follow-through prompts

AI + Human Escalation Workflow

• Structured protocols for how automation leads, when humans step in, and how cases escalate

Multi-Channel Messaging Logic

• Seamless coordination of RCS, SMS fallback, and AI voice calls, determining the best communication method by user behavior

Care Coordination SOPs

• Internal playbooks that define how coordinators respond, communicate, escalate, and support members

Family Engagement Framework

• Scripts, timing patterns, and communication templates that keep families informed and reduce churn

These planned assets will be difficult to replicate once implemented, giving Local LifeCare a defensible advantage as we formalize IP protection post-funding.

Internal IP Controls

Local LifeCare protects its trade secrets through:

• Mandatory IP assignment agreements for all employees and contractors
• Strict confidentiality and NDA execution during onboarding
• Role-based access restrictions to data, code, and workflows
• Encrypted private repositories for product and AI code
• Controlled access to SOPs and playbooks used in care coordination

This ensures proprietary processes remain internal and secured.

Commercial Contracts & Vendor Compliance

Local LifeCare partners with industry-standard, HIPAA-aligned vendors and maintains formal Business Associate Agreements (BAAs) for all PHI-handling services.

Applicable BAAs Executed

Vendor	Purpose	PHI Handling	Status
AWS	Infrastructure hosting (S3, RDS, CloudFront)	Encrypted PHI	✅
Twilio	SMS, RCS, and voice delivery	Metadata only	✅
Vapi	AI voice agent for automated check-ins	De-identified	✅
SendGrid	Transactional notifications	No PHI in email body	✅
Segment	Analytics routing	De-identified	✅

All vendors maintain SOC 2 or equivalent security certifications and meet HIPAA technical safeguard requirements.

Contract Templates

Local LifeCare maintains a standardized suite of commercial agreements that simplify onboarding for employers, Employer Groups, and DPC clinics:

• Flat-fee licensing (AKS-safe)
• Clear scope-of-services definitions
• Data use and privacy provisions tailored for HIPAA
• SLA thresholds appropriate for non-clinical coordination services

This ensures smooth contracting and regulatory compliance as the company scales through large distribution channels.

Insurance & Risk Management

Insurance Coverage

Policy	Coverage	Notes
General Liability	$2M	Protects against general business risks
Errors & Omissions (Tech E&O)	$3M	Covers automation logic, coordination workflows, and service delivery
Cyber Liability	$5M	Required for PHI; covers breach response, forensics, and notification
Directors & Officers (D&O)	$5M	To be activated immediately post-seed for board protection
Workers Compensation	State-required	Active in WA and DE

The combination of Tech E&O and Cyber Liability makes Local LifeCare "enterprise ready" for employer and Employer Group/DPC contracts while maintaining minimal regulatory burden — a key enabler of our 90% gross margins and software-like unit economics.

Regulatory Advantage: Non-Clinical Model

Local LifeCare operates strictly as a non-clinical Life Care Platform, which provides massive regulatory and economic advantages:

What We DON'T Do (avoiding regulatory burden):

• No diagnosis or treatment
• No medication changes or clinical advisement
• No telehealth or clinical workflows
• No state healthcare licenses required
• No clinical staff or medical directors needed

What We DO (enabling software economics):

• Daily execution support through automation
• Medication adherence reminders and coordination
• Life management assistance (appointments, refills, tasks)
• Family engagement and communication
• Behavioral nudges and habit formation

This structure enables Local LifeCare to:

• Deploy nationally without state-by-state healthcare licensing
• Maintain 90% gross margins through automation-first operations
• Scale to 6M lives with minimal incremental costs
• Achieve software-like economics while solving a healthcare-adjacent problem

All medical issues are redirected to licensed providers, removing clinical liability and allowing us to operate with the regulatory freedom of a technology company — not a healthcare provider.

Key Legal Risks & Mitigation

Risk Category	Description	Mitigation
Regulatory Classification	States misinterpreting the service as medical care	Clear disclaimers, non-clinical SOPs, legal reviews in high-volume states
Anti-Kickback Compliance	Risk of perceived referral incentives	Flat-fee contracts; no per-referral payments
Privacy & Security	Unauthorized PHI access	Multi-factor authentication, encryption, RBAC, access audits
Vendor Dependency	Twilio or AWS service interruption	Multi-carrier messaging redundancy and fallback logic
Sales Cycle Risk	Delays in enterprise or payer contracting	Multi-channel GTM (employer → Employer Group → DPC) reduces concentration risk
Data Breach	HIPAA exposure and incident liability	$5M cyber insurance + SOC 2-aligned security stack

These risks are typical for early-stage technology companies and are mitigated through proper structure, insurance, and operational discipline.

Compliance Audits & Certifications

Completed

• ✅ HIPAA Security Risk Assessment (Q4 2024)
• ✅ Delaware and Washington business licenses
• ✅ Background checks cleared for all coordinators

In Progress

• 🔄 SOC 2 Type II Audit (completion expected Q2 2026)
• 🔄 Security penetration testing (Q1 2026)

Planned

• 📋 ISO 27001 Certification (Year 2)
• 📋 Additional state business registrations as needed for expansion