Smule has claimed we violated non-solicitation provision in our contract by recruiting each other to start a startup; that we appropriated Smule's code or methods to build Shred Video (though they don't make any specific trade secret claims); That Mark is guilty of fraud in his consulting relationship w/ Smule's engineers (this is detailed our post); and We converted Smule's proprietary information into Shred Video (far as I understand, conversion is a fancy word for "stealing").
The "non-solicitation" claim is laughable, especially in California. The fraud claim is fraudulent itself, as the email record clearly shows Smule itself asked for Mark's help, and he was wholly transparent in the way he provided that help. Everything else comes down to whether we used Smule's proprietary code or methods.
When Smith says "I'm fairly confident we will figure something out eventually...unfortunately...with a bunch of lawyers," seems a reasonable interpretation that "a bunch of lawyers" is code for legal threats, and "figure something out" is code for us paying him (in equity or otherwise) to withdraw the legal threat.