Brown, Dale - Patrick McLanahan 10 (14 page)

 
          
“Of
course,” Helen replied. They all took seats around one end of the conference
table. “On behalf of everyone here at Sky Masters Inc., welcome to
Blytheville
and the Arkansas International Jetport. We
have a tour of the facilities planned, then lunch, then a briefing on our
current projects and plans for future growth. Suzanne?” Suzanne handed her two
folders. “Here is our current audited financials and company statements,
including the latest Department of Defense and Congressional Budget Office
audits and financial condition statements. I’m sure you’ll find that Sky
Masters Inc. is well positioned to ride out the shortterm economic slowdown and
market situation and get ready to take advantage of new opportunities.”

 
          
“So,
if you’ll excuse me,” Jon said, rising quickly to his feet. “I’ve got to head
back to the labs. But I’ll see you for lunch at twelve-thirty, and then I will
make myself available for questions afterward. I hope you have a nice—”

           
“We’ve already taken the tour, Dr.
Masters,” Duffield said. “We arrived yesterday, remember? You set that up for
us then.”

           
“And we’ve already downloaded a copy
of your financials from your website and from the Defense Department’s audit
department,”
Hudson
said. “Your staff should be commended, Doctors. Your own marketing
information parallels the government data exactly, neither overstating nor
understating your situation.”

 
          
“Situation?”
Jon asked defensively. He remained standing. “There’s no ‘situation.’ ”

 
          
Duffield
looked down at the table, paused for a moment as if steeling herself for the
confrontation she knew had to occur, then spread her hands and looked sternly
at Jon. “With all due respect, Dr. Masters, your company is, shall we say,
running a little peaked.”

 
          
“
‘Peaked’? What does that mean?”

 
          
“In
our analysts’ view, your company is spending lots of money, acquiring equipment
and real estate, flying aircraft, and making space launches—all without any
obvious possibility of translating the activity into a government contract,”
Duffield said. “You’re a publicly traded company with apparently no
responsibility or accountability to your shareholders.”

 
          
“I
guess you just don’t know us as well as you think.”

 
          
“Your
outlays for new equipment don’t even come close to your contracts,”
Hudson
said. “You have projects on two-, three-,
five-, even ten-year timelines with no contract, no requests for proposals, not
even draft technology memos.”

 
          
“We’re
a research firm as well as a design-and-development center,” Helen said. Jon
took his seat, gearing himself up to defend his company alongside his wife,
trying to present a unified front. “Jon and I have spent most of our careers in
advanced research, most of it begun completely in-house with no government
inputs. Jon has written over a thousand papers on dozens of emerging
technologies, things the government has never dreamed of before.”

 
          
“We
make the RFPs and technology memos
happen, folks,” Jon said pointedly, “not the other way around. They read our
research abstracts and come up with ideas based on our research. That’s why
they come to us when they want something.”

 
          
“But
they haven’t been coming,”
Hudson
said. “Contracts have all but dried up.”

 
          
“We
line up four or five new technology-maturation grants and feasibility study
funds every month,” Helen said. “They may not be long-term big-ticket
contracts, but they pay the bills and allow us to do what we do best—design and
develop cutting-edge technology. The contracts will come. Everything takes
time.”

 
          
“Then
we’re in the dark, Doctors, because the numbers don’t balance,”
Hudson
pressed. “You’re running a slight deficit,
showing large sums borrowed from investors, shareholders, and company officers.
But we look around your facility and we see at least three times the capital
outlays just at this facility. And we know you have at least one other design
center and three operations facilities. Where does the money come from,
Doctors?”

           
“It’s all in the audit. Read it
again.”

 
          
“How
much does your company involve itself in classified government projects?”
Duffield asked.

 
          
“That’s
classified,” Jon replied. “I could tell you, but then I’d have to kill you.” He
chuckled at his own joke, but none of them laughed back. The little girl looked
up from her reading—the technical journal was back on her lap, opened up to a
picture of a particle accelerator in Texas, probably the only pretty full-color
photo in the entire magazine—but also did not smile.

 
          
“We
have a top-secret security clearance,” Duffield said. “We’ve also received
permission from DoD and the Justice Department to talk—”

 
          
“Not
that I know of,” Jon shot back. “As soon as I have my security folks brief me
on your security status, and we verify it with the FBI and DoD, we can talk.”

 
          
“Your
chief of security seems to be on hiatus,” Duffield observed. “So are most of
your senior development and operations staff. We wanted to meet the McLanahans
especially.”

 
          
“They’re
out of the country. On business.”

 
          
“What
business?” Duffield asked. “Company business? Or is it classified?”

 
          
“I
don’t want to discuss it.”

 
          
“We
also wanted to see some of your research aircraft, particularly the FlightHawk
unmanned attack aircraft, the Megafortress flying battleship, and the airborne
laser pene- trator aircraft,” Duffield went on. “None of those aircraft are on
the field, or at any of your other facilities either. Where are they?”

 
          
“They
must be flying,” Jon replied. “They do that a lot, you know.”

 
          
“They
certainly do—a lot more than we’d expect of a system still in design phase,”
Hudson
said. “A quick glance at your petroleum
bills alone and one would think you ran a tactical air wing.”

 
          
“One
would be wrong.”

 
          
“You
certainly have the computer capabilities to do extensive computerized flight
testing on all of your aircraft, weapons, and spacecraft,” Duffield said. Jon
and Helen noticed that the little girl had gotten out of her seat and walked
over beside her mother, her little hands clutching the upside-down technical
journal, intently watching Jon. “In fact, your systems rival companies twice as
large as yours—again, far more capability than your income stream suggests you
need. You certainly use the computers you have, but for what we’re not quite
certain—apparently not for advanced design and development, since you seem to
fly the aircraft to test them.”

 
          
“Something
wrong with that?” Jon asked testily. “Or is that a typical bean-counter
question?”

 
          
“Most
companies would lease additional computer systems—you purchased them, and you
spend twice as much as most other companies in upscaling them yearly,”
Hudson
said. “Why is that, Doctors?”

 
          
“It
has to do with our security classification,” Helen offered. “Leased systems
usually means getting a security evaluation for the leasing company’s personnel
as well, which we end up paying for and becoming responsible for maintaining.”

 
          
“Besides,
we like to have the best,” Jon responded testily. “Is this interrogation going
somewhere? Let’s get to the bottom line, shall we?”

 
          
Duffield
sat back in her seat, folding her hands on her lap. “Maybe we got off on the
wrong foot here, Doctors.”

 
          
“Maybe
you
have.”

 
          
“Sierra
Vistas Partners are not corporate raiders,” she said.

 
          
“My
butt tells me otherwise.”

 
          
“Jon,
please,” Helen quietly admonished her husband. She turned to Duffield. “What is
it you wish, Mrs. Duffield?”

 
          
“My
company is looking to invest in a small but solid high-tech
research-and-development firm like yours, to help launch the absolute newest
innovations in aerospace, electronics, communications, materials science, and
advanced weapon design,” Duffield said. “We’re not interested in improving
current technologies—we want to develop the next-generation technologies. We
know Sky Masters Inc. is on the cutting edge. We want to tap into that. We’re
prepared to offer a sizable capital investment as well as contributions in
personnel and abstracts to be a part of it.”

 
          
“Abstracts?
You mean, buy into my company with a bunch of
ideas?”
Jon retorted. “Why would I need that? I’ve got plenty of
ideas of my own, thank you very much.”

           
“Lately, you seem to be stuck on improving
existing designs rather than breaking out new ones,” Duffield said. “We can
help. We have some of the finest new engineers waiting to start.”

           
“In this current economic and
budgetary climate,”
Hudson
said, “we find it easier and better to merge with an existing firm that
might be ... how should we say it... ?”

           
“You already said ‘peaked,’ ” Jon
said accusingly.

           
“ ‘Peaked,’ ” the little girl
parroted. “That’s what Mommy said.” Jon gave her a sideways smile.

 
          
“It’s
a win-win situation for all of us,” Duffield went on. “We contribute to Sky
Masters’s continued success and sustained future growth, positioning you as the
company of the future while all the other contractors are struggling to hold
their heads above water.”

 
          
“We’re
not struggling,” Helen said. “Read our prospectus—we feel we’re more than
adequately capitalized to hold us for—”

 
          
“Two
months? Maybe another quarter? Two quarters at the most?”
Hudson
interjected. “That’s all we foresee.”

 
          
“Is
that right?” Jon retorted. “Well, the company is not for sale, and we don’t need
investors or outside hacks.”

           
“You’re a publicly traded
corporation, about to be delisted from the NASDAQ exchange because of low
trading volume and frequency-of-trading restrictions, including halted trades
and non-openings,” Duffield said. “We’ve researched your personal holdings as
well. You have tried to buy back your company stock and failed every time. Your
personal net worth is good, but you’ve leveraged many of your assets to help
try to acquire your company stock. The stock has been on a slide for months,
and it’s hurting your own personal holdings. You’re piloting a sinking ship,
Doctors.”

 
          
“Thanks
for the financial advice, but we don’t need it.”

 
          
“As
you know, we’ve already been in contact with a good number of your larger
shareholders,”
Hudson
said. Jon knew, all right—that was the reason for this meeting in the
first place. “No one came right out and said it, but there is a lot of
uneasiness about the company and your stewardship of it. The shareholders have
not met or voted, but have informally indicated to us that they might be
willing to consider a merger, stock swap, or buyout. As Mrs. Duffield said,
we’re not corporate raiders, but we do know a company ripe for
acquisition—hostile or otherwise. Sky Masters Inc. is it.”