Meeting Title: Brainforge Merger and Conversion Planning Date: 2025-08-12 Meeting participants: Uttam Kumaran, Robin O’Donnell, Rico Rejoso, Megan’s Notetaker, Megan Murray
WEBVTT
1 00:00:15.800 ⇒ 00:00:16.830 Uttam Kumaran: Hello!
2 00:00:17.790 ⇒ 00:00:19.729 Uttam Kumaran: Hey, everyone. Hi, Robin.
3 00:00:19.990 ⇒ 00:00:20.950 Robin O’Donnell: Hi.
4 00:00:21.010 ⇒ 00:00:22.160 Uttam Kumaran: Hi, nice to meet you.
5 00:00:22.700 ⇒ 00:00:24.069 Robin O’Donnell: Nice to meet you as well.
6 00:00:24.720 ⇒ 00:00:34.230 Uttam Kumaran: Great! So yeah, I guess, we sent some notes over email on the call. Here, you have, myself, you have Megan, who, leads our,
7 00:00:34.360 ⇒ 00:00:37.930 Uttam Kumaran: our finance team, and then you have Rico, who’s on our operations team.
8 00:00:38.190 ⇒ 00:00:47.219 Uttam Kumaran: So yeah, I guess everybody should be kind of up-to-date on the email I sent, but, yeah, we’re trying to kind of embark on this, project.
9 00:00:47.360 ⇒ 00:01:01.339 Uttam Kumaran: And for us, you know, mainly so that we can budget and start to get a sense of, like, timeline, would love to just answer any questions you have, and also, I know, you know, we’ve been working with Alyssa for a while, and with… Yeah.
10 00:01:01.520 ⇒ 00:01:05.280 Uttam Kumaran: Yeah, so anything we can answer about the company as well as your, ….
11 00:01:05.680 ⇒ 00:01:13.309 Megan Murray: And Robin, before we get into the whole meat of things, I do have my note-taker defaults into meetings. Is that a problem with you?
12 00:01:13.310 ⇒ 00:01:14.449 Robin O’Donnell: That’s fine, no problem.
13 00:01:14.450 ⇒ 00:01:20.970 Megan Murray: Okay, yeah, I know every, legal person has a different opinion, so just like to ask up front.
14 00:01:20.970 ⇒ 00:01:22.340 Robin O’Donnell: Yeah, thank you for that.
15 00:01:23.110 ⇒ 00:01:26.330 Robin O’Donnell: … So, …
16 00:01:26.650 ⇒ 00:01:32.579 Robin O’Donnell: In terms… where do you want to get started? Do you want us to go through the primer that you provided? ….
17 00:01:33.660 ⇒ 00:01:44.869 Uttam Kumaran: That would be great, yeah, and I’m happy to provide any background on BrainForge or anything, but, yeah, just want to answer any questions and go through that, if that’s the best route.
18 00:01:45.400 ⇒ 00:02:02.689 Robin O’Donnell: So, I just want to make sure that you understand that, because… so, a merger… I assume that you’ve done your homework already and read about mergers and conversions, but in order for it to be a tax-free conversion or a merger, it would have to be the same owners. So, one of these will be tax-free. And so.
19 00:02:02.860 ⇒ 00:02:12.830 Robin O’Donnell: if we’re converting Brainforge to the corporation, that would be a tax-free transaction. But then, once we merge in,
20 00:02:12.950 ⇒ 00:02:22.270 Robin O’Donnell: the other company, Pungo Insights, then it… that will likely have certain tax implications. I just want to make sure you’re aware of that. But….
21 00:02:22.270 ⇒ 00:02:41.029 Megan Murray: Yeah, there’s… this is, … I know it gets tricky, especially from an accounting and sale perspective. We’ve gone back and forth between, like, do we convert the existing entity into a C-Corp, or do we just spin up a new C-Corp?
22 00:02:41.170 ⇒ 00:02:48.760 Megan Murray: that has new partners, and then winds down the independent LLCs. So, so….
23 00:02:48.760 ⇒ 00:02:49.610 Robin O’Donnell: ….
24 00:02:50.190 ⇒ 00:02:54.559 Megan Murray: What’s your thoughts on either or both of those?
25 00:02:54.560 ⇒ 00:03:11.939 Robin O’Donnell: It really depends, kind of, how far along the companies are, and how many… because the farther along the companies are, the more complicated it gets to just dissolve instead of convert, right? Because if you dissolve both entities and start a new entity, you have to enter into all new contracts, you have to, …
26 00:03:12.060 ⇒ 00:03:31.769 Robin O’Donnell: you have to get new accounts for everything. But then again, I’ve also talked to people who said that when you convert an LLC to a corporation, because you have to get a new EIN anyways, a lot of it is still… you still have to go through a lot of the same steps anyways. They would be able to dissolve and then, create a new corporation.
27 00:03:31.820 ⇒ 00:03:40.270 Robin O’Donnell: So… … How long has Brainforge been around again? I think that we assisted with forming it, right?
28 00:03:40.790 ⇒ 00:03:41.650 Uttam Kumaran: 2 years.
29 00:03:41.650 ⇒ 00:03:44.499 Robin O’Donnell: two years. And what about Pungo Insights?
30 00:03:44.990 ⇒ 00:03:47.379 Uttam Kumaran: Congo Inside, similar time frame, 2 years.
31 00:03:47.380 ⇒ 00:04:06.950 Robin O’Donnell: Okay, so it is… it might be beneficial to just dissolve them and start a new one, because those transfer taxes that I mentioned that Pungo Insights will be subject to, if we transfer that company, or merge the company after converting Brainforge,
32 00:04:07.600 ⇒ 00:04:22.519 Robin O’Donnell: might be more significant than just dissolving the companies and starting a new one. But again, how far along are each of these companies? Do they each have a lot of contracts already in place? I know that we’ve helped with a few contracts, but I don’t know
33 00:04:22.650 ⇒ 00:04:28.669 Robin O’Donnell: To what extent… how far along those are, and if it would be too difficult to enter into new contracts at this stage.
34 00:04:29.130 ⇒ 00:04:39.899 Uttam Kumaran: Yeah, so most of the… so the kind of the… the reason why there is two is… is me and my business partner, Robert, were sort of operating independently. We kind of came together, and now most of the…
35 00:04:39.980 ⇒ 00:04:54.240 Uttam Kumaran: I would say, kind of, like, probably 100% of the business is now… probably 90% of the revenue is kind of running through Brainforge, and we still have, like, one or two contracts that are still running through Pongo. But these are… it’s probably, like.
36 00:04:54.370 ⇒ 00:05:04.819 Uttam Kumaran: 10 to 15 active engagements, and we’re growing, like, the business is about, it’s about doing, like, close to a million in run rate. …
37 00:05:05.050 ⇒ 00:05:10.880 Uttam Kumaran: But everything is currently being signed, or, you know, we’re making sure everything’s signed with Brainforge, yeah, Brainforge LLC.
38 00:05:10.880 ⇒ 00:05:14.950 Robin O’Donnell: I’m sorry, did you say that you’re close to a million in fundraising?
39 00:05:15.130 ⇒ 00:05:17.809 Uttam Kumaran: No, in, in, in run rate.
40 00:05:17.810 ⇒ 00:05:19.530 Megan Murray: No, no investor funds.
41 00:05:19.530 ⇒ 00:05:21.730 Uttam Kumaran: There’s no, there’s no external investors.
42 00:05:21.730 ⇒ 00:05:24.159 Robin O’Donnell: Across a million and what? I’m sorry, I….
43 00:05:24.160 ⇒ 00:05:26.979 Uttam Kumaran: In, in, in run rate, like, just run rate revenue.
44 00:05:27.330 ⇒ 00:05:33.719 Robin O’Donnell: Okay, so that… are you aware that that’s one of the… so I believe the threshold for a qualified small business
45 00:05:33.950 ⇒ 00:05:36.859 Robin O’Donnell: Oh, sorry, never mind. One minute.
46 00:05:37.140 ⇒ 00:05:41.600 Robin O’Donnell: Around 50 million, okay. … It’s in my mind. Okay.
47 00:05:43.620 ⇒ 00:05:44.820 Robin O’Donnell: ….
48 00:05:45.720 ⇒ 00:05:53.069 Uttam Kumaran: So yeah, and then in terms of also this, like, I’m currently the only W2 employee for Brainforge. Everything else is… are all contractors.
49 00:05:54.990 ⇒ 00:05:55.470 Robin O’Donnell: Well….
50 00:05:55.470 ⇒ 00:06:05.940 Megan Murray: But we’ve been kind of structuring, Utam as, you know, owner withdrawals, but yeah, he’s correct. They’re… everybody else is contractors.
51 00:06:06.200 ⇒ 00:06:12.050 Megan Murray: So, it’s a mix of… Onshore and offshore, so, there’s some…
52 00:06:12.440 ⇒ 00:06:18.799 Megan Murray: 1099 eligible, and others that are international, so we kind of manage all of that, but…
53 00:06:19.440 ⇒ 00:06:30.539 Megan Murray: I hear what you’re saying about, like, and this is why we kind of keep coming back to, like, a lot of the… a lot of the work we’re gonna do is, like, spinning up a new entity, or converting the new one.
54 00:06:30.540 ⇒ 00:06:42.439 Megan Murray: the existing one is kind of the same, so, like, operationally, is it just cleaner? I was just trying to pull up a recent contract and see if we have assignment language in the customer contracts.
55 00:06:43.030 ⇒ 00:06:51.809 Megan Murray: Where we could just assign it to the new entity. You might know more off the top of your head for that.
56 00:06:52.420 ⇒ 00:06:53.520 Megan Murray: ….
57 00:06:53.860 ⇒ 00:06:54.720 Robin O’Donnell: ….
58 00:06:58.580 ⇒ 00:07:02.490 Megan Murray: Yeah, the assignment agree… I see the assignment agreement…
59 00:07:06.900 ⇒ 00:07:12.920 Megan Murray: So, I don’t see anything explicitly that says that, like, the company has assignment language, but
60 00:07:13.030 ⇒ 00:07:15.439 Megan Murray: you know, I think that we could probably…
61 00:07:15.650 ⇒ 00:07:28.190 Megan Murray: handle that. We’re not talking hundreds of contracts, like Tom said, there’s 10. Some of those, by the time we actually get through, or there’s probably 10 to 15, some of those will probably, …
62 00:07:28.190 ⇒ 00:07:39.600 Megan Murray: you know, kind of complete and won’t renew. There will probably be another series of other new ones coming in that do renew, so we can probably manage through that, just with discussions.
63 00:07:39.930 ⇒ 00:07:46.600 Megan Murray: you know, between you, Tom, and the clients. It’s not like the services would be changing, it’s just the, you know.
64 00:07:47.320 ⇒ 00:07:49.079 Megan Murray: Billing entity, really.
65 00:07:50.190 ⇒ 00:07:54.220 Robin O’Donnell: So, it… I’d say from… I couldn’t…
66 00:07:54.350 ⇒ 00:07:57.539 Robin O’Donnell: Operational standpoint, a conversion is easier.
67 00:07:57.780 ⇒ 00:08:03.350 Robin O’Donnell: But from the actual behind-the-scenes legal out.
68 00:08:03.610 ⇒ 00:08:11.679 Robin O’Donnell: documentation perspective, I’d say just dissolving and forming a new company is probably slightly easier.
69 00:08:12.110 ⇒ 00:08:20.570 Robin O’Donnell: Because it would just be, you know, dissolving those two companies and forming a new one. If you were to convert… the conversion process is
70 00:08:21.020 ⇒ 00:08:33.430 Robin O’Donnell: you’re… you’re paying a lot of fees. Texas has a lot of fees for conversion, they’re pretty high. And then also the Delaware ones, whereas just to dissolve in Texas, I believe, is…
71 00:08:33.470 ⇒ 00:08:41.039 Robin O’Donnell: a lot less than converting out into the Delaware Corporation. Is Pungo Insights also a Texas LLC?
72 00:08:41.650 ⇒ 00:08:43.850 Uttam Kumaran: No, it’s, Nevada, I believe.
73 00:08:50.600 ⇒ 00:08:51.380 Robin O’Donnell: Okay.
74 00:08:52.560 ⇒ 00:09:11.629 Robin O’Donnell: So, I think it’s just a matter of considering, from an operational standpoint, if it does… if it be smooth… if being… if it being a smoother transition is more important to you, it would make more sense to do the conversion, whereas if it’s more important to just save a little bit on, government filing fees, for example, it would…
75 00:09:12.090 ⇒ 00:09:15.039 Robin O’Donnell: Make more sense to dissolve and then reincorporate.
76 00:09:19.130 ⇒ 00:09:23.460 Megan Murray: Yeah, is there… is there any issue of having some overlap between the two? Like.
77 00:09:23.720 ⇒ 00:09:36.759 Megan Murray: if we were to begin the C-Corp format, because obviously it’s going to be easier to dissolve if we’ve already got accounts and things set up, ready to go, so we can just transfer funds, you know, operationally speaking, of course, but …
78 00:09:37.310 ⇒ 00:09:43.049 Megan Murray: then… because the… the dissolution for both, like, I don’t, …
79 00:09:43.430 ⇒ 00:09:47.239 Megan Murray: I don’t have a sense for, like, what Pongo’s, …
80 00:09:48.560 ⇒ 00:09:52.490 Megan Murray: Well, I… I guess at that point, then, you know.
81 00:09:53.830 ⇒ 00:10:00.439 Robin O’Donnell: Could you also liquidate, right? So, if you do, boy, dissolve, each of these are only owned by one person, correct?
82 00:10:00.440 ⇒ 00:10:01.270 Megan Murray: Right.
83 00:10:01.270 ⇒ 00:10:17.789 Robin O’Donnell: So that makes it… that actually makes it pretty easy. So if both of them were dissolved, they’d have to liquidate. And as, you know, you’ve been talking about, the IP, of course, is a big one, and so it’s an easier transition in terms of the IP if you do a conversion.
84 00:10:18.350 ⇒ 00:10:32.490 Robin O’Donnell: The task implications for Pungo Insights merging into the corporation are largely due to the value of Pungo, so if all of the revenue is already kind of in rainforest, it probably wouldn’t be too… too much.
85 00:10:32.910 ⇒ 00:10:41.009 Robin O’Donnell: of a burden, right? So how this would work is Brainforge LLC would convert to the corporation, and then,
86 00:10:41.850 ⇒ 00:10:56.579 Robin O’Donnell: the current owner of Brainforge would remain the owner immediately upon conversion, and then Pungo Insights would then be merged into the corporation, and then after that, the second… Robert would be the second owner, oh, added after the merger.
87 00:10:56.680 ⇒ 00:11:02.769 Robin O’Donnell: But immediately upon conversion, it has to be the same owner as before. So, at first, it would only be
88 00:11:03.070 ⇒ 00:11:12.239 Robin O’Donnell: it remained the same owner as the Brainforge LOC, and then, after that, Congo Insights would be merged, and then the second owner would be added.
89 00:11:13.810 ⇒ 00:11:16.280 Megan Murray: And that’s going with the conversion, ….
90 00:11:16.280 ⇒ 00:11:16.990 Robin O’Donnell: And Roger.
91 00:11:16.990 ⇒ 00:11:17.590 Megan Murray: Right.
92 00:11:17.810 ⇒ 00:11:24.969 Robin O’Donnell: It would be… yeah, so it’s essentially… it’s almost like three steps. They’re… you’re merging out of…
93 00:11:25.130 ⇒ 00:11:29.350 Robin O’Donnell: the Texas LLC into the corporation, and then
94 00:11:29.960 ⇒ 00:11:38.400 Robin O’Donnell: Forming the Delaware Corporation, essentially, and then the merger of the Nevada LLC into the corporation,
95 00:11:38.560 ⇒ 00:11:41.249 Robin O’Donnell: And then that one is merged out of existence.
96 00:11:41.720 ⇒ 00:11:44.140 Robin O’Donnell: And becomes part of the Delaware Corporation.
97 00:11:45.300 ⇒ 00:11:52.360 Megan Murray: Yeah, yeah, I see what you’re saying. So, versus if we just spun up a new entity, then… …
98 00:11:53.000 ⇒ 00:12:00.240 Megan Murray: yeah, I guess at that point, we could just dissolve the Brain Forge LLC … Yeah.
99 00:12:00.240 ⇒ 00:12:07.820 Robin O’Donnell: If both of them have significant IP, the conversion… upon conversion, the assets move with the company, and same as the merger.
100 00:12:07.870 ⇒ 00:12:21.519 Robin O’Donnell: upon merger, the assets also stay with the company, so it makes it an easier in terms of, you don’t have to have a whole set of separate documents just to transfer the assets to the Delaware Corporation if you do it that way.
101 00:12:23.550 ⇒ 00:12:29.629 Megan Murray: And debt would also transfer too, right? Like, credit cards… And, yeah, so…
102 00:12:30.460 ⇒ 00:12:36.459 Megan Murray: Okay, and then if we’re doing that sort of transfer then, then, …
103 00:12:37.140 ⇒ 00:12:41.990 Megan Murray: You know, also, like, the tax impact, then.
104 00:12:42.410 ⇒ 00:12:50.669 Megan Murray: to kind of do the conversion with the LLC, transfer all assets and liabilities, get the new,
105 00:12:51.200 ⇒ 00:12:53.800 Megan Murray: you know, get the new EIN set up.
106 00:12:54.020 ⇒ 00:12:59.020 Megan Murray: And then… and then bringing in Pungo after all of that.
107 00:12:59.330 ⇒ 00:13:03.730 Megan Murray: Would probably be the most effective way to
108 00:13:04.030 ⇒ 00:13:09.370 Megan Murray: make it a tax-free transaction for UTAM, but then what about Pungo?
109 00:13:09.970 ⇒ 00:13:16.840 Robin O’Donnell: Right, so, as mentioned, it won’t be… anytime you… You transfer ownership interest to
110 00:13:16.910 ⇒ 00:13:26.630 Robin O’Donnell: another entity that’s not the same ownership, there’s going to be some tax implications, but as mentioned, if Pungo Insights is
111 00:13:26.630 ⇒ 00:13:37.740 Robin O’Donnell: essentially not really holding any value anymore, or very little, then it’ll be less of an impact than if you were to, say, convert Congo Insights and then merge in Rain Forge.
112 00:13:40.200 ⇒ 00:13:41.669 Megan Murray: Gotcha, okay.
113 00:13:43.490 ⇒ 00:13:51.030 Megan Murray: Yeah, and I guess, like, operationally speaking, like, a lot of that work is kind of the same.
114 00:13:51.820 ⇒ 00:13:55.389 Megan Murray: Just cause using… well, I guess I have…
115 00:13:56.400 ⇒ 00:14:04.639 Megan Murray: I’ve done this in the past, too. Like, I did have one experience where we… we managed two EINs through one
116 00:14:04.720 ⇒ 00:14:18.860 Megan Murray: bank account, but the accounts themselves had their own, EIN, so we were able to kind of navigate that operationally, and then just move everything out, and then,
117 00:14:19.340 ⇒ 00:14:23.759 Megan Murray: So, like, we could… we could navigate doing it that way.
118 00:14:23.760 ⇒ 00:14:42.939 Megan Murray: I guess, like, as we’re… the other thing, too, like, a big part of this in either… either way that we go with it is getting an idea of the legal costs, too, just because we need to plan for, what that looks like, so… and… and whether that’s either fees that would go directly
119 00:14:42.940 ⇒ 00:14:52.640 Megan Murray: you know, directly to Ben’s Law, and then I know you’ve mentioned, like, the, kind of surrounding fees with all the various different state registrations.
120 00:14:52.720 ⇒ 00:14:53.310 Megan Murray: ….
121 00:14:53.310 ⇒ 00:14:53.640 Robin O’Donnell: Yep.
122 00:14:53.640 ⇒ 00:14:58.080 Megan Murray: Can you help us, like, figure out what that would look like?
123 00:14:58.080 ⇒ 00:15:03.270 Robin O’Donnell: The conversion portion would be a flat fee rate, so the conversion would be, …
124 00:15:03.800 ⇒ 00:15:16.540 Robin O’Donnell: But the conversion of Brainforge to the Delaware Corporation would be 400 of government filing fees from Texas, and about $700 from Delaware.
125 00:15:17.910 ⇒ 00:15:22.219 Megan Murray: Okay, and that’s to do the conversion, which would come with the new EIN regardless.
126 00:15:22.220 ⇒ 00:15:22.840 Robin O’Donnell: Right.
127 00:15:23.130 ⇒ 00:15:27.120 Megan Murray: Okay, so, like, 4 grand? A little more? 4 to 5?
128 00:15:27.930 ⇒ 00:15:32.680 Robin O’Donnell: … A little bit… actually, a little bit less than 4 grand.
129 00:15:33.240 ⇒ 00:15:34.020 Megan Murray: Okay.
130 00:15:34.220 ⇒ 00:15:37.560 Robin O’Donnell: So, more like 30… around 3,500. …
131 00:15:38.810 ⇒ 00:15:54.319 Robin O’Donnell: A little bit more than that, but around that. And then Pungo, and then merging Pungo into the company is done at an hourly fee. I’d say that it will probably take between 2 and 5 hours, and my hourly rate is 575.
132 00:15:55.660 ⇒ 00:15:57.979 Megan Murray: Okay, so if we assume another…
133 00:15:58.450 ⇒ 00:16:04.449 Megan Murray: High end on that. … So, yeah, okay, so…
134 00:16:04.630 ⇒ 00:16:10.399 Megan Murray: I don’t have Excel up. How do I not have Excel up? I’m just trying to keep a running…
135 00:16:10.660 ⇒ 00:16:12.520 Megan Murray: Estimate here.
136 00:16:19.080 ⇒ 00:16:23.379 Megan Murray: Okay, so we’re talking all in for the conversion, …
137 00:16:24.520 ⇒ 00:16:27.199 Megan Murray: Probably about 7K on the high end.
138 00:16:27.930 ⇒ 00:16:30.180 Robin O’Donnell: I’m rounding. I’m rounding up.
139 00:16:32.180 ⇒ 00:16:32.990 Robin O’Donnell: Yes.
140 00:16:33.200 ⇒ 00:16:34.669 Megan Murray: So, okay.
141 00:16:35.050 ⇒ 00:16:49.970 Megan Murray: And, then, is there anything else, like, that would be on top of that, like, including, like, stock option pools, and kind of, like, building out the cap table? We’d have, like.
142 00:16:50.260 ⇒ 00:16:57.539 Megan Murray: Yeah, anything related to then, like, your typical C-Corp owner, quote, stuff that might fall into that.
143 00:16:59.790 ⇒ 00:17:10.810 Robin O’Donnell: I guess a new list of what’s included, but that would include, you know, not just the actual conversion and incorporation, but all the bylaws, all of the, stock
144 00:17:11.030 ⇒ 00:17:28.120 Robin O’Donnell: conversion documentation and merger documentation, so it wouldn’t… it wouldn’t include a stock… an equity incentive plan, including stock options, but it includes all the other documentation that reflects the new ownership and new stock owners.
145 00:17:29.010 ⇒ 00:17:32.280 Megan Murray: Okay, and an ESOP would probably be, …
146 00:17:33.010 ⇒ 00:17:37.949 Megan Murray: That probably wouldn’t be in the initial phase of this rollout, like.
147 00:17:37.950 ⇒ 00:17:41.699 Robin O’Donnell: Right, that would be… That would be an additional project.
148 00:17:42.290 ⇒ 00:17:51.809 Megan Murray: Okay, and I think that makes sense operationally, too, because this is already a lot, and, you know, we’d need to make sure that we were in a position where we could
149 00:17:51.810 ⇒ 00:18:04.289 Megan Murray: you know, man… because, like, right now, as you can imagine, going from contractors to employees, then we’ve got to start factoring in benefits and all kinds of other things. So… so yes, that changes the game.
150 00:18:04.290 ⇒ 00:18:05.430 Megan Murray: …
151 00:18:05.900 ⇒ 00:18:17.110 Megan Murray: And then… okay, so ESOP’s not included for that. And then versus, like, doing the full C-Corp spin-up, like, what’s kind of your estimates for that?
152 00:18:18.360 ⇒ 00:18:24.140 Robin O’Donnell: the full C-Crypt spin-off, so that is included in the conversion fee, flat rate fee.
153 00:18:24.860 ⇒ 00:18:28.510 Megan Murray: Oh, okay, yes, I, sorry, I, I was, ….
154 00:18:28.510 ⇒ 00:18:37.559 Robin O’Donnell: I was unclear. I meant if we were to spin up a C corp, and then wind down the independent LLCs,
155 00:18:37.560 ⇒ 00:18:39.900 Megan Murray: And go that route, like….
156 00:18:40.720 ⇒ 00:18:41.680 Robin O’Donnell: Oh, I see it.
157 00:18:41.680 ⇒ 00:18:42.500 Megan Murray: Yeah.
158 00:18:42.820 ⇒ 00:18:46.630 Robin O’Donnell: So, the… in that case, the Delaware Corporation,
159 00:18:46.920 ⇒ 00:18:59.009 Robin O’Donnell: Well, see, the reason for the conversion fee as it is is because it’s a single owner, so if it’s a multi-owner dollar corporation, it would actually be similar. It’d be $2,595.
160 00:18:59.420 ⇒ 00:19:02.340 Megan Murray: It’s flat rate, and then $700 of….
161 00:19:02.560 ⇒ 00:19:04.710 Robin O’Donnell: filing fees, …
162 00:19:05.170 ⇒ 00:19:16.380 Robin O’Donnell: And then, in terms of the dissolution, if you wanted our assistance with the dissolution of the two LOCs, those would each take between one and a half and… and I’d say one and a half and
163 00:19:16.570 ⇒ 00:19:18.440 Robin O’Donnell: Two and a half hours, probably.
164 00:19:19.480 ⇒ 00:19:20.360 Megan Murray: Okay.
165 00:19:22.620 ⇒ 00:19:25.569 Megan Murray: And that’s per, LLC.
166 00:19:25.570 ⇒ 00:19:26.310 Robin O’Donnell: Right.
167 00:19:26.450 ⇒ 00:19:28.310 Megan Murray: Okay, and we’d have to….
168 00:19:28.310 ⇒ 00:19:29.800 Robin O’Donnell: It might be, like, an hour.
169 00:19:29.820 ⇒ 00:19:30.710 Megan Murray: Okay. Yeah.
170 00:19:32.500 ⇒ 00:19:43.770 Megan Murray: So, … So I guess, like, it’s… Yeah, I mean… Well, and…
171 00:19:43.930 ⇒ 00:19:50.970 Megan Murray: So with the conversion, though, we wouldn’t have to dissolve… well, I guess we would still have to dissolve the one LLC, right?
172 00:19:52.310 ⇒ 00:19:58.550 Robin O’Donnell: The… yes, the one that merged out, … Yeah.
173 00:19:58.830 ⇒ 00:20:00.350 Robin O’Donnell: Yes. The punko one?
174 00:20:01.920 ⇒ 00:20:02.530 Robin O’Donnell: Yeah.
175 00:20:03.320 ⇒ 00:20:04.120 Megan Murray: Okay.
176 00:20:04.270 ⇒ 00:20:07.530 Megan Murray: So we have to con… okay, so…
177 00:20:09.240 ⇒ 00:20:16.359 Megan Murray: So, with just the conversion, I know you’ve mentioned, like, 3 to 5 hours at the hourly rate.
178 00:20:18.460 ⇒ 00:20:24.299 Megan Murray: That would include the dissolution, though, right? I’m just trying to get an apples-to-apples of what we’re asking for.
179 00:20:24.520 ⇒ 00:20:28.270 Robin O’Donnell: Yeah, so the 2695, …
180 00:20:29.300 ⇒ 00:20:37.700 Robin O’Donnell: plus 400 plus 700 was the conversion, and then 2 to 5 hours, I’m saying, for the merger, including the dissolution,
181 00:20:37.890 ⇒ 00:20:39.490 Robin O’Donnell: Condo.
182 00:20:40.170 ⇒ 00:20:45.729 Megan Murray: Okay, gotcha. So… Pretty much all in, it’s…
183 00:20:45.840 ⇒ 00:20:52.270 Megan Murray: Yeah, I see what you’re saying. Maybe a little bit cheaper to just spin up a new C corp, …
184 00:20:52.910 ⇒ 00:20:57.339 Megan Murray: And then… but then the wine’s down, I think then we’d have….
185 00:20:59.490 ⇒ 00:21:07.000 Uttam Kumaran: Yeah, I think some of this, too, is, like, we might want to, Tom, we might want to look at this with Troy, just kind of, like.
186 00:21:07.170 ⇒ 00:21:19.750 Megan Murray: just because we’ve got, assets that would be transferring in either case, but then we’d also have debt, and I know it’s, like, depending on how the debt is converted.
187 00:21:19.820 ⇒ 00:21:23.010 Uttam Kumaran: You know, there might be some….
188 00:21:23.010 ⇒ 00:21:30.390 Megan Murray: Unless, Robin, if you know, too, like, if we’re… does that have any sort of tax implications from a…
189 00:21:30.630 ⇒ 00:21:34.090 Megan Murray: debt transfer perspective? I just don’t know.
190 00:21:36.040 ⇒ 00:21:43.709 Robin O’Donnell: … Well, not for Brainforge, because Brainforge would essentially be carrying on as the same business.
191 00:21:44.780 ⇒ 00:21:54.750 Robin O’Donnell: But for… Pongo, … I… I’m not positive, …
192 00:21:59.480 ⇒ 00:22:04.430 Robin O’Donnell: I’m not positive for Pundo. I don’t… yeah, I’m not, …
193 00:22:11.430 ⇒ 00:22:17.160 Robin O’Donnell: It… it might not. I… yeah, I’d have to double check, with a CPA.
194 00:22:19.000 ⇒ 00:22:23.109 Robin O’Donnell: But Brainforge, no, because Brainforge would just be continuing on, and…
195 00:22:23.840 ⇒ 00:22:28.579 Robin O’Donnell: But Pungo might… because it’s almost, like, different… how much debt does Pungo have?
196 00:22:29.920 ⇒ 00:22:37.360 Megan Murray: I actually don’t really know the intricacies of Pungo’s books, so I can’t speak to that. I just have, …
197 00:22:37.590 ⇒ 00:22:39.040 Megan Murray: Brainforge.
198 00:22:39.200 ⇒ 00:22:58.289 Robin O’Donnell: Okay, so it wouldn’t be a problem for Bankport, because it would just be converting, and the new converting entity would just take on the debt, so it wouldn’t have any… there wouldn’t be any debt forgiveness or anything like that that has tax implications, but for Pungo, because I believe that if Pungo does have any debt, it could be seen as debt forgiveness.
199 00:23:01.410 ⇒ 00:23:07.340 Megan Murray: Tom, do you think there’s any reason that Robert would keep Pungo Insights, LLC S-Corp?
200 00:23:07.700 ⇒ 00:23:08.880 Megan Murray: active.
201 00:23:10.160 ⇒ 00:23:20.929 Uttam Kumaran: I don’t believe so, but it’s a good thing for us to make a decision on. I mean, I brought it up before, I think it was just going to be based on what the requirements for this is, so….
202 00:23:25.620 ⇒ 00:23:27.359 Megan Murray: Yeah, so…
203 00:23:28.690 ⇒ 00:23:34.150 Megan Murray: Because I guess if he’s just coming in as a new owner to the C Corp, then they’re technically…
204 00:23:35.050 ⇒ 00:23:40.370 Megan Murray: might, like… not be a requirement? I don’t know how that works.
205 00:23:40.370 ⇒ 00:23:49.519 Uttam Kumaran: I would say the only thing is, like, we… the only contract, I believe, that’s with Pungo is that Eden contract, and I’m sure they’d be okay for us to move it over.
206 00:23:50.130 ⇒ 00:23:53.699 Uttam Kumaran: That’s the only one, you know, so….
207 00:23:55.420 ⇒ 00:23:56.060 Megan Murray: Yeah.
208 00:23:58.730 ⇒ 00:24:03.050 Megan Murray: Which is a lot easier than trying to go to all the other contracts and say, hey.
209 00:24:03.250 ⇒ 00:24:05.970 Megan Murray: Here’s our new assignment language, yeah.
210 00:24:05.970 ⇒ 00:24:06.700 Uttam Kumaran: Yes.
211 00:24:08.140 ⇒ 00:24:12.899 Megan Murray: So… Okay, so all in, it sounds like…
212 00:24:13.360 ⇒ 00:24:26.209 Megan Murray: High-end estimate, going the conversion route, like, we could, you know, excluding any sort of, stock option agreements and anything else like that.
213 00:24:26.600 ⇒ 00:24:34.779 Megan Murray: … Sounds like we could do this whole kit and caboodle for 7K. I’m rounding up there.
214 00:24:34.950 ⇒ 00:24:35.360 Robin O’Donnell: Yeah.
215 00:24:35.360 ⇒ 00:24:36.130 Megan Murray: ….
216 00:24:36.130 ⇒ 00:24:36.930 Robin O’Donnell: You’ll be able to.
217 00:24:37.060 ⇒ 00:24:40.889 Megan Murray: So, I think that’s a good estimate that we can work with, Utom.
218 00:24:40.890 ⇒ 00:24:41.430 Uttam Kumaran: Right?
219 00:24:42.320 ⇒ 00:24:49.240 Megan Murray: … Yeah, and then we can check with our CPA team about, like.
220 00:24:49.640 ⇒ 00:24:55.600 Megan Murray: Kind of confirming a lot of this, like, if we’re going the conversion route, …
221 00:24:57.510 ⇒ 00:25:05.279 Megan Murray: Yeah, I mean, like, operationally speaking, it’s gonna be just a lot of the same stuff, like, we are gonna have to have, like, new…
222 00:25:05.450 ⇒ 00:25:07.350 Megan Murray: EINs, ….
223 00:25:07.390 ⇒ 00:25:08.720 Robin O’Donnell: Like, you got the….
224 00:25:08.720 ⇒ 00:25:11.120 Megan Murray: even ramp and things that, like.
225 00:25:11.410 ⇒ 00:25:14.919 Megan Murray: All the credit cards. Some of it might be easier than….
226 00:25:14.920 ⇒ 00:25:15.770 Robin O’Donnell: others.
227 00:25:15.930 ⇒ 00:25:32.700 Robin O’Donnell: So I’ve also dealt with this a lot in the past, and it definitely depends on your bank. When you do conversion, people do conversion because it does make it easier. As mentioned, the IP of the company goes with the company, and some banks, but not all, allow you to keep the same account.
228 00:25:32.700 ⇒ 00:25:37.479 Robin O’Donnell: As long as you show that it was a conversion and not an entirely new entity.
229 00:25:38.430 ⇒ 00:25:46.929 Megan Murray: Yeah, that’s… that’s what I did before, with another organization, and… and you’re right, and honestly, like, we could…
230 00:25:47.000 ⇒ 00:26:02.799 Megan Murray: we still had access to both accounts, it was just, like, we literally renamed one to Do Not Use. It’s, like, kind of stayed out there. But when you, like, dug in behind the scenes, like, you could see that there were two distinct, different EINs, too.
231 00:26:03.520 ⇒ 00:26:04.860 Megan Murray: So… Welcome.
232 00:26:04.860 ⇒ 00:26:21.220 Robin O’Donnell: Well, some banks will let you keep the exact same banking account, but it… I know that there’s some banks that don’t allow that. Some banks say if you have a new EIN, you have to open up another account. Some say if you show that it’s a conversion and it’s still the same entry for legal purposes, then they’ll let you keep the exact same bank account.
233 00:26:21.440 ⇒ 00:26:22.140 Megan Murray: Yeah.
234 00:26:23.210 ⇒ 00:26:24.680 Megan Murray: Yeah, exactly.
235 00:26:26.620 ⇒ 00:26:28.150 Megan Murray: So, okay.
236 00:26:30.650 ⇒ 00:26:47.780 Megan Murray: And, Tom, I know you had a lot of other things on your, list, like 409A, 83B, QSBS. 409A wouldn’t kick in until, the company hit the one-year mark or had, you know, a priced round.
237 00:26:47.980 ⇒ 00:26:58.899 Uttam Kumaran: Yeah, it’s probably the QSBS stuff, especially since the rules changed, but yeah, I guess we would just kick that off then, or it wouldn’t inherit, like, the fact that Brainforce started 2 years ago, right?
238 00:26:59.770 ⇒ 00:27:06.179 Robin O’Donnell: So, the QSBS is based on when an actual stock is issued from a C corporation.
239 00:27:06.180 ⇒ 00:27:06.950 Uttam Kumaran: As you can see us soon.
240 00:27:06.950 ⇒ 00:27:07.730 Robin O’Donnell: So…
241 00:27:07.920 ⇒ 00:27:20.799 Robin O’Donnell: we… when we did conversion, the membership interest would convert to stock, and that would be the original issuance, so the QSB would start to be… would be triggered from the time of the conversion.
242 00:27:21.020 ⇒ 00:27:21.640 Uttam Kumaran: Okay.
243 00:27:24.670 ⇒ 00:27:30.449 Megan Murray: Yeah, and same with the… so that also… same thing with the 409A and also the 83B.
244 00:27:30.600 ⇒ 00:27:31.290 Uttam Kumaran: Okay.
245 00:27:31.290 ⇒ 00:27:39.950 Robin O’Donnell: Right, so, but the thing is, so when you convert, and it would 100%… it technically accelerates anything that’s been busting.
246 00:27:40.190 ⇒ 00:27:47.320 Robin O’Donnell: So, the A3B election wouldn’t really apply, at least not for, the conversion of Brainforge.
247 00:27:52.510 ⇒ 00:27:58.160 Robin O’Donnell: There’s all… any membership interest will then convert to shares.
248 00:27:58.310 ⇒ 00:27:59.470 Robin O’Donnell: Oh, we’re asking.
249 00:28:03.550 ⇒ 00:28:05.280 Megan Murray: Okay, I see what you mean.
250 00:28:11.820 ⇒ 00:28:13.800 Megan Murray: Okay, ….
251 00:28:15.220 ⇒ 00:28:22.080 Uttam Kumaran: So maybe what I can do is I can just sort of write up some of this into a little bit of, like, a project plan, and just have that as a notes.
252 00:28:22.190 ⇒ 00:28:25.220 Uttam Kumaran: And then maybe, Megan, we can circle back and chat in Slack.
253 00:28:25.480 ⇒ 00:28:26.340 Uttam Kumaran: Okay.
254 00:28:26.730 ⇒ 00:28:34.089 Uttam Kumaran: And then… yeah, Robin, I guess we could just be in touch over email if we’re ready to execute, and then sort of get a little bit of, like, what you would need from our side.
255 00:28:34.450 ⇒ 00:28:35.130 Robin O’Donnell: Okay.
256 00:28:35.450 ⇒ 00:28:39.320 Robin O’Donnell: Yeah, that sounds good. Yeah, just let me know, and then…
257 00:28:39.730 ⇒ 00:28:41.650 Robin O’Donnell: Yeah, we can get started, remember.
258 00:28:41.650 ⇒ 00:28:45.800 Uttam Kumaran: Yeah, we went through VIN for all of our company formation and everything, so…
259 00:28:46.210 ⇒ 00:28:51.019 Uttam Kumaran: Yeah, so hopefully it’s smooth, but yeah, maybe we’ll get back to you as soon as we can.
260 00:28:51.210 ⇒ 00:28:52.530 Robin O’Donnell: Okay, sounds good.
261 00:28:53.530 ⇒ 00:28:55.380 Uttam Kumaran: Okay, alright, thank you, everyone.
262 00:28:55.620 ⇒ 00:28:59.360 Robin O’Donnell: Well, thanks for being available so quickly, that was super….
263 00:28:59.360 ⇒ 00:29:00.500 Megan Murray: Super helpful.
264 00:29:00.500 ⇒ 00:29:01.599 Robin O’Donnell: Okay, no problem.
265 00:29:01.960 ⇒ 00:29:03.799 Megan Murray: Okay, thanks. Bye.
266 00:29:03.800 ⇒ 00:29:04.440 Robin O’Donnell: Funny.