| Hello Newbie co-founder. You MUST consult with a lawyer asap since getting advice on a forum online is not legal advice. Close your browser and call one NOW! However if you read below that line - you're on your own :) --------------------------------- Since you developed the code and you never signed on any paper that hand over the rights to that code to another person or a company (I hope you didn't) then you probably have some leverage since your co-founder (or his corporation) won't be able to use it. One of the few things that you do when you incorporate is create a TAA (Technology Assignment Agreement) that will sell your IP to the corporation. The technology assignment agreements deal with IP that was created by the IP owner before the he became a shareholder - in your case IP created by founders pre-incorporation. The technology assignment agreement is usually referred in the stock purchase agreement (SPA) since the transfer can be seen as the consideration for any stock purchased by you (when incorporating). Without that any founders will have a hard time to get investors to invest since the company itself does not hold any right over the code or any inventions. Additionally - I must say that your co-founder might be right in the fact that you do not want to incorporate the company until you can know for sure there is some sort of positive outcome. It seems that you just built an MVP and there's no need to incorporate (payroll? selling something?). Incorporating means that you will need to start declaring taxes and report to the IRS and that add a lot of overhead that you DO NOT WANT. The best thing to do is probably wait until you have some investors showing interest and then incorporate in order to receive that investment. I would probably consult with a lawyer and prepare a sit-down with your co-founder to form a legal document that will establish the relationship between the co-founders. AS always - IANAL p.s: Edited and added some clarification about TAA |