1) How much of your $5M payment is unliquidated, hold in an escrow account? People tells me its a relevant amount, but you look like to be denying it.

LBS: All of our payments were liquidated.  There was originally $1 million in an escrow account, but Hashfast claimed they needed that money to complete our order, and the funds were released from escrow.  Hashfast has received all of the payments we cite directly and in cash, nothing remained in escrow.

 

2) What guarantees us that you would build boards and mine with it for our benefits, apart from your words? You could do nothing, keep the IP and use it for whatever purpose, give the chips back after a few months quoting whatever problem, and we would be all completely screwed with no recourse.

LBS: Please recall that the $2 million paid to the estate for executory contracts, administrative expenses, etc. is non-refundable (i.e. we cannot get it back) as is the $5.3 million claim waiver.  The performance/payment of the Note/IOU is backed by all of the assets of the company; this includes any cash in the company, all the hardware, and all the IP both received and independently developed.  As a result, if we did as you suggest, we would pay $2 million in cash, forfeit our right to ever collet on the $5.3 million Hashfast’s estate would otherwise owe us, and get nothing in return (the hardware and all the IP and everything else would go back to the estate if the note/IOU is defaulted on).  So, short answer what guarantees you that we will build the boards is our own enlightened self-interest; building the  boards is the only way we get paid back, and not building them means we have just given away $7.3 million ($2 million in cash, $5.3 million in waived claims) and get nothing in exchange.

I will propose you a better and simpler company definition:

LBS: As you know, an amount of fixed processing power gets less valuable on the network every day, and we are very nearly at the point where we will have to withdraw the offer. So, it is a little bit late in the game to be making major changes to the proposal, but fortunately most of what you discuss below is already addressed within the context of the terms/offer.

1) You create a new company and send $10M to it. You bind yourself not to withdraw that money in any way other than for board build costs and admistrative expenses.

LBS: This is already the case.  Specifically we are forming  a new company in which this venture will occur (sometimes called “NewCo” in the 363 sale terms), and Liquidbits cannot take any profits or dividends from this company until after the note/IOU and the stock/equity given to the creditors has been totally paid off.

2) You get every chip and asset you want.

LBS: Also part of the current terms.

3) You mine with it and keep 100% of whatever you mine until when you recover the build costs.

LBS: Already part of the current terms except that it is less than 100% which less favorable to us and more favorable to you.

4) Once that you have recovered it, you only get to keep 20% or so of the mined.

LBS: Once that has been recovered, we keep nothing until the note/IOU and the creditor preferred stock/equity has been paid off in full.  Only once all the creditors have been paid back (via the note/IOU and equity which should total about 100% of what Hashfast owes them), do Liquidbits and its investors get to keep the profits.  All of the creditors we spoke to early on in this process, expressed interest in terms which ensured they would get paid first (and therefore minimized down-side risk), rather than increased risk for the possibility of more profits down the road assuming all continues to go well (up-side risk).  Please keep in mind though, our investors are bringing $10 million in cash to the table (and Liquidbits is waving $5.3 in claims), for what would be characterized as a high risk venture.  Accordingly, the ultimate Return on Investment (ROI), has to justify that risk and investment when compared to the other places/ways they could invest it.

5) We get to audit your books and the datacenters continuously and at any time. You will basically give us access cards for the datacenters.

LBS: The right to inspect and audit the company’s books and records is already explicitly stated in the 363 sale terms.  While we cannot give each creditor an access card to the data center (other people have equipment there and it would be a major security violation), we would be happy to provide escorted tours/inspections of the data centers at reasonable intervals on very short notice.

Everyone wins. No one can screw anyone.

LBS: That is what we are aiming for and we like to think that these terms accomplish that.

If you are legitime, those terms should be appealing. If you are not, you need to find a way to screw us, and that document looks quite like it.

LBS: We are legitimate.  As discussed above virtually all of the terms you discuss are already part of our proposal, or even more favorable to you.  We regret that many people are getting the impression that the 363 sale terms document is giving people the wrong conclusion.  We suspect that this may be the result of some unfamiliarity with documents written in heavy Legalese; this is why we are hosting the interactive phone session tomorrow, so that we can explain the terms document more clearly to people.