Apologies in advance to anyone who finds historical curiosity dull, but I am stuck on this reoccurring conversation about "mergers", and whether or not it is important that DFI and DFMI didn't. Or did but not in writing. It's not impossible that this will have some significance on the appeal, and on-going business as well.
I'm using "merger" in I think the conventional sense, i.e. to mean "2 companies becoming 1 company". This didn't happen in the conventional sense because DFI and DFMI remained separate companies. DFI now being owned by Tmmi, and DFMI dissolved (although somehow able to sue and be sued).
DFMI couldn't buy shares in DFI, for example, because DFI was a flow thru entity (an S corp), and shares in flow thrus must be owned by a real person, not a company. So it wouldn't be possible for DFMI and DFI to merge by DFMI buying DFI. (Also, it wouldn't be possible for Tmmi to buy DFI as long as it was a S corp...)
This is also why, as I understand it, the license arrangement with Iterated could not be with DFI, as Iterated required shares in the licensee. So DFMI was created, etc. Or so it was said.
So there was no merger. DFMI became the licensee. It is said that all the shareholders in DFI were transported over to DFMI (although I'm not sure that's true). The money raised through the sale of TMMI shares was then paid to Iterated, and Iterated issued the license to DFMI. All because of the flow thru status with the IRS.
Changing the IRS status from an S corp to a C corp (which can be owned by a company) is not a difficult thing to do. It's essentially a matter of filing out a form. Tmmi did it later with DFI, and was thereby able to buy DFI (for whatever reason).
The other way of using the term "merger", and the way that WuChong may be using it (?), is a merger of interests. In other words, from Iterated's perspective, ignoring formalities it might have appeared that DFI and DFMI were the same entity. Perhaps Sloan didn't care which company was on the other side of the license, provided Tmmi was supportive. (Perhaps he and others even thought that DFI had changed from an S corp to a C corp, and changed it's name, all while remaining the same entity?).
This could explain a lot...
