by Dale Brown
guarded secret: Wendy, Patrick, Hal Briggs, and Chris Wohl were all employees of Sky Masters Inc., and Paul McLanahan, although employed as an attorney in California, had worked closely with Sky Masters for years on development of the Tin Man battle armor and other weapons. "I'm a little preoccupied right now."
"But the Duffields don't know any of that," Helen said, closing Jon's office door behind her. "We can't tell them several of our people are involved in secret commando attacks in Libya. We have to carry on as if everything is okay. If we don't, it'll look like we're just blowing them off-and we definitely don't want to do that."
"Helen, I thought all this shareholder and ownership and corporate-resolution stuff was your responsibility," Jon whined. "All I want to do is be an inventor, work in the labs, design stuff.. ."
"You are also chief operating officer and the majority shareholder, so you have a say in everything that goes on," Helen reminded him. "Of course, you can always transfer all your shares to me, and then I can relieve you of your position as COO and largest shareholder and you can be just a regular salaried employee-just like you did to me six years ago."
"C'mon, now-you're still not mad about that, are you?" Jon asked with a faint smile.
"A guy eight years my junior who had never even owned a car before marches into the company I mortgaged my parents' house to start and takes over in just a couple years-what do I have to be mad about?" Helen responded. But she smiled at him and said, "Actually, I was impressed by what you did, even though I squawked and hollered every step of the way until I was purpl , and I'm proud and pleased with what you've done with my com-
pany since then. You're a good guy, Jon. That impish spoiJed-brat personality is almost gone, and you've turned into a regular guy." She paused, her smile warm and genuine. "The guy I love."
Jon looked up and smiled back. "And I love you, Helen." He sighed, then added, "And you can have the stock and the title. I don't want it. It's not worth that much these days anyway."
"Bull, Dr. Masters," Helen said. "If you didn't want it, you would have given it away long ago, or put it into a trust for the child you keep promising to make with me-if you'd ever go home and spend a night in bed with me. And don't worry about the stock value. Sure, it's gone down in recent months with the downturn in the NASDAQ, but with the sweetheart stock option deals you finagled, you're still a rich guy." She stepped over behind him and gently massaged his shoulders. "Besides, giving up the stock and your position in the company wouldn't relieve you of worrying about our friends, or mourning Paul McLanahan."
"No. I guess it wouldn't." Jon sighed. "I can't believe Paul's gone. We were almost the same age. He was teaching me how to sail. We were buddies. I felt closer to him than I did to Patrick."
She massaged his shoulders a bit more until he moaned with pleasure, then patted his shoulder, hard, in the direction of his office door. "Let's go, Doctor. Let's meet the Duffields."
"Remind me who they are again?"
"You know who they are," Helen said, rolling her eyes with mock exasperation. "Conan David Duffield is the retired founder of SumaTek, the largest very-high-speed integrated-circuit design company in the world and the pioneer of nanotechnology. We have used SumaTek chips in our designs for ten years. He's in his late forties, degrees from Rutgers and Cornell, he's into French and Napa Valley wine, humane treatment of animals, and private schools, including providing scholarships to good students who otherwise couldn't afford a private-school education. His new acquisition company is called Sierra Vistas Part-
ners. He's the money guy-he buys, rehabilitates, grows, and sells distressed high-tech companies."
"Hey, this company is not 'distressed.'"
"I'm not saying it is, Jon," Helen said quickly. But they both knew better-the combination of a downturning stock market, a glut of fairly modern Russian
and Chinese weapons on the global arms market, and vastly lower defense spending had depressed stock values and affected thousands of defense-related companies all over the world, including Sky Masters Inc.
"His wife is Dr. Kelsey D. Duffield, Ph.D.," Helen went on. "I don't have that much info on her-she keeps more to herself. I hear she's much younger than he is. She's the front person: she investigates and evaluates companies, then reports to him."
"What's her degree in?"
"Which one? She has six or seven of them, including two Ph.D.s-electrical engineering, math, physics, computer-language design, chemistry, and a couple others. Speaks seven languages, plays concert-quality piano, writes music, and is an expert-level downhill skier and chess player. They have one child-I don't know her name."
"Sheesh, is this the definition of a dysfunctional family, or what?" Jon quipped. Helen scowled at him. "I'm only kidding. Sounds like a perfectly wonderful, albeit superoverachieving family unit. Wonder what the little girl's going to grow up like?" Helen looked at him with a knowing smile-she was looking at him. "Don't answer that."
"Can we go now?"
"All right, all right, let's meet the whiz family. But after this, no more meetings until our guys are safe."
"Deal."
"And we are not selling them the company," Jon added. Helen said nothing. The answer to that question, at least for the time being, was not up to them. "Let's go."
They walked out of Jon's office, and Suzanne escorted them to the conference room. The folks waiting for them stood politely when they entered. Kelsey Duffield was a
pretty woman in her mid-thirties, her reddish-blond hair tied back behind her neck. She wore a simple silk business suit and carried a thin briefcase, and she had a good, strong handshake and a confident, pleasing smile.
"Very pleased to meet you, Dr. Duffield," Jon said as he stepped quickly into the room, extending a hand and shaking hers enthusiastically. "I've heard a great deal about you."
The woman's eyebrows furrowed. "I'm not a doctor, Dr. Masters. Just a lowly CPA." Jon glanced at Helen, a bit confused and surprised by her misinformation-Helen usually didn't get the details wrong. Duffield turned and nodded to the man standing beside her. "This is my associate and chief financial officer, Neil Hudson. Neil, this is Dr. Jon Masters, COO, and Dr. Helen Kaddiri Masters, chairman of the board."
As they shook hands, they heard a clatter. "Oh, dear, please be careful. Ladies and gentlemen, my daughter. She seems to have a case of the dropsies today." Duffield rushed over to a sideboard, where a cute little brunette girl of nine or ten had just spilled a cup of orange juice on her dress. The little girl studied Jon for a long moment while her mother cleaned her up. Jon smiled at her, and she smiled back. He found it cute that she had spilled juice on a copy of a technical journal that she had in her lap. Her mother put the engineering journal aside and put a well-worn copy of a children's book of airplanes on her daughter's lap.
Jon noticed that the girl was still staring at him, the smile gone, as Duffield returned to the group. Jon winked at her, but she did not respond. Well, Jon never did click well with little kids-probably why he was hesitating having some of his own.
"Would your daughter be more comfortable in the daycare center, with some other children her age?" Helen asked. "It's just across the courtyard."
"Or I'd be happy to take her to the park," Suzanne offered.
Both the elder and younger Duffields looked a bit confused. "No, she's fine here," the elder Duffield said coolly.
The numbers guy, Hudson, looked a little aghast for a moment; then, after Duffield glanced at him, he appeared as if he was suppressing a chuckle. "Shall we get started?"
"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 Departm
ent 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-anddevelopment 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 penetrator 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.
"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."
"Your shareholders told us that there's always a need for fresh blood, new faces, and innovative leadership," Duffield added. "Sierra Vistas Partners has a long track record of successfully reorganizing and reenergizing companies of all sizes, while providing maximum value and benefits for shareholders and employees alike. We want to be part of the future, Doctors. We have an opportunity to use our talent and innovation to design our country's nextgeneration technologies at a minimal cost."