Chapter 5: Acquisitions and Mergers

March 11^th, 1991

“Happy Birthday ... to you...”

Peter cringed as he sat in his typical spot in the first booth upon entering the Round Table Pizza. Friends and well-wishers surrounded him as he tried to dial back the sensationalism surrounding his 17^th birthday. ‘God, please make it stop!’ he grimaced as they continued belting out the stupid lyrics. Kathy appeared from the kitchen area with two employees carrying a large decorated cake between them. She and Al tried to convince him to step out a little and enjoy his party in style. They hoped he would accept their thoughts on having a swinging gala atop the Space Needle or something equally extravagant. But he wasn’t into grandiose expressions for something he felt was as basic as it was mandatory. At his insistence, he coerced them into accepting his wish to have a simple party at their old haunt. What he hadn’t contended with was their vengeance for thwarting their efforts. Thus, the small pizzeria was packed to the gills. They even dragged his sister across the state, for the event — something he couldn’t accomplish unless he were lying on his deathbed.

“Come on!” Veronica scolded him with a solid punch in the arm. She was seated beside him in the booth. “Cheer up. Or I’ll make them sing it again.” He flatly refused to wear the idiotic dunce cap like the rest of them and glared back at his girlfriend when she bent over to blow a noisy party favor in his face, striking him in the nose as it unrolled.

Alan sat across from him wearing a shit-eating grin at his friend’s discomfort. “Yeah. Happy up, Sonny! Give us a speech!”

The only other person present, who seemed as dour and ill-at-ease, was Arty, who sat in the adjacent booth that backed up to the arcade. He was surrounded by half a dozen native kids who seemed determined to deplete the restaurant of Root Beer. His presence was also mandated by the other two partners, who felt it was good to drag him out of the basement under his mom’s house once in a while. Kathy’s loud and obnoxious cousins kept him trapped in the booth when they weren’t challenging him to bouts of might and skill in the arcade itself.

“Very well,” Peter grumbled as Kathy relit the candles on his giant cake. “I think you all suck!”

There were several jeers as he fumed over the fuss being made of the occasion. “Just quit bitching, make a wish, and blow,” Veronica chided from beside him.

‘I already got my wish,’ he thought as he dutifully took in a breath and extinguished the candles. Today marked not only his 17^th birthday — but also his emancipation. Complete and total freedom to do whatever he wanted, whenever he wanted. And with whomever he wanted to do it with. He and Kathy had already decided on their next venture by booking a 2-week Alaskan Cruise for April.

Aside from the ridiculously large cake, another booth was set aside for a pile of wrapped presents and cards from the many guests as well as those who could not attend. One parcel was laden with postage stamps from the UK. It was from Monty and Allister who had just returned home after several weeks of scooping up potentially lucrative real estate ventures scattered about the Hawaiian Islands. Peter and Kathy made fast friends with the two amicable ‘gents’ and accepted several invitations to go and explore the area with an eye for future returns. They ended up entrusting the two capitalists to help them navigate through the quagmire of red tape and financial codswallop — becoming informal partners in the property asset accumulation business.

The twins sent an elaborate, hand-made card wishing Peter all the best for his ‘coming-of-age’ celebration. There was also a note offering a brief update and the ‘princely’ returns they were already enjoying from their joint ventures. Peter had asked that they take any profits realized on his and Kathy’s part and simply reinvest it in the next play.

Jeremiah spent several afternoons with the couple, helping them set up several off-shore ‘tax exemption vehicles’ to further protect their money from ‘erosion’. This also involved multiple Trust funds that provided them and their immediate loved ones with funds that were protected from excess taxation as well. Veronica was set up so that she wouldn’t have to worry about her day-to-day living expenses while she focused on her studies to become a veterinarian. For that matter — she needn’t ever concern herself with money issues ever again. But that did not distract her or stifle her ambition in any way.

It was also at Jeremiah’s recommendation that the PAAK Gaming Company file for incorporation with the state of Wyoming where the first limited liability companies were established. This required a ‘board meeting’ where the charter was drafted and ratified. Once the forms and fees were submitted and filed in Cheyenne, Peter, Alan, Arty, and Kathy morphed their partnership into PAAK Gaming, LLC.

After the party had died down and most of the guests departed, the four of them opted for a quick meeting. Naturally, Peter was able to cite all company figures and projections from memory.

“At present, we are licensing 18 games with ORCA, and our projected royalty distribution for this quarter is expected to be $73,556 each,” he smiled as he sat between his sister and girlfriend, across from Alan and Arty. “Give or take a few dollars.”

The Korean boy whistled appreciatively. “How ‘bout them apples?” he mused, glancing at the red-haired nerd beside him.

“At present, we have no pending games to offer them and frankly, I haven’t been giving it much thought lately,” Peter continued. He turned his cheek to gently kiss Kathy’s head where it rested against his shoulder. “When I last spoke with Jason in February, he subtly hinted at the notion of making an offer for sole proprietorship.”

“ORCA wants to buy us out?” Alan exclaimed after sucking his Dr. Pepper dry.

“It’s premature to guess at this time, but we have been turning over a tidy profit for them,” Peter replied studying the thoughtful expression in their new partner’s face. “But it’s something that we should keep in mind looking forward.” He nodded at the carrot top, “What’s on your mind Arty?”

The man across from him twitched as he was called out and cleared his throat, awkwardly. “Um ... I was just thinking about future acquisitions,” he began as he studied the tall frosted glass in front of him. “I know this guy ... kid, to be honest.”

They waited patiently for him to continue.

“He writes games, I take it?”

Arty nodded with a shrug, “A game, actually. He wrote it in C++ because of the superior object orientation but it incorporates C as well.”

Peter and Alan sat forward and focused more intently on the programmer. “I’ve read a lot about OOP support,” Al interjected. “It seems to be slower but the coding is way more efficient.”

Peter nodded thoughtfully. “What kind of game?”

“It’s a simulation variant but hella cool to play,” Arty said eagerly, adjusting his glasses. “I’ve been helping him with the classes and objects.” He drew their attention to the table surface and began gesturing with his hands. “It’s a 3D model of a town or village and the player has to build everything in the town to develop it into a modern city. You literally control every aspect of the village development, from the political leadership to public works, education, facilities, and attractions. Your progress is determined by the growth in population.

“Brian is really good but I think if we took it and expanded it, we could make a massive programming engine that we could then use to develop all kinds of different Sim scenarios — from medieval lands with warring neighbors to merchant trading systems in ... say the Caribbean with pirates and traders.” The others smiled inwardly as Arty became more animated.

“I was even thinking about a concept variation that incorporates the Victorian Steampunk genre.”

Kathy squealed with excitement. “Oh my God! I love Jeter!”

Veronica was far less intrigued. “Anyone have any quarters?” she asked as she shimmied out of the booth.

Peter pursed his lips as he considered Arty’s words. “Now when you say, ‘if we took it’ what do you mean? Is this kid willing to collaborate with us?”

The red-headed programmer snorted, “I talked to him a week ago and he seems to have completely lost interest in it. It’s just sitting on floppies in a shoe box on his shelf.”

“Do you think he would consider selling to us?” Alan asked.

Arty smiled, “I asked him that very question when I stopped by his house.”

Peter sighed exasperated, “And?”

The red-haired partner grinned eagerly, “He gaffed at me and said ‘Not for a thousand dollars!’.”

The kid’s name was Brian Gatz. He was 14 years old, black, and stood six and a half feet tall. Arty made arrangements for Peter and Alan to meet with him in his home. It was clear upon meeting the skinny giant that he was more interested in collegiate basketball than programming. His room was a shrine to the sport whereas his custom-made computer seemed to be gathering dust in a corner. He pulled the shoebox down and sorted through a handful of 3.5-inch floppies before inserting one into his computer and loading up ‘The Village’. He let Arty take over the demo while Peter and Alan stood behind him and looked over his shoulder. As far as showiness and curb appeal, it was pretty lame. The screen depicted a boxy-looking town as if the viewer were gazing down upon a chess board. However, the characters moved about on the board on their own and interacted with each other in an almost lifelike fashion. Arty demonstrated how different features generated revenue allowing the player ‘Mayor’ to pay for upgrades or the addition of new revenue sources. There was no sound and the animation was erratic and sketchy at best. But the real-time sequencing blew both of them away. Alan asked to have a go at it while Peter began suggesting root fixes to the object orientation protocols. There was an energetic byplay between the three of them as they played with the C++ coding engine Brian had developed. They discussed it for several minutes before Peter held up a hand.

“I’ve seen enough,” he stated calmly before turning to the black youth who was seated on his bed spinning a basketball on his fingertip. He set the ball down and looked back at them with a bored expression. “Brian, I understand you mentioned that you wouldn’t sell your game for a ‘thousand dollars’, is that right?”

The black youth shrugged. “Never said I wasn’t open to a deal, though. What do you want with my game and how much are you willing to pay me for it?”

“Direct and to the point,” Peter smiled. “Just the way I like it.” He then spent several minutes describing how PAAK, LLC operated. He intended to take the game and strip it down to its base roots, upgrade the 16-bit graphics, and add a musical score. The rest was a simple reengineering of the code to make the game better, bigger, and vastly superior to the demo they had just tested.

“The only thing that will be left of your original work will be the skeleton that we rebuild it on,” Alan added from the desk chair.

“So, what do I get out of it?” Brian asked curtly.

“I won’t lie to you,” Peter stated plainly. “There is a shit ton of work to be done before we can cobble together a new and improved version of your original game. It’s gonna take the four of us weeks or months to break this down and build it back up to PAAK standards. Once that is done, we will license it to ORCA and probably enjoy a nice little return on our work. So here is what I will offer you,” he held up one finger. “Option one is you lease us the rights to take your software and redevelop it as we see fit. I will pay you $3,000 upfront and offer you one percent of all profits PAAK Gaming receives from the original game. We will likely use the engine to create other models but those will be ours to own and license since that work will be completely on our shoulders.”

He could tell by the glint in the boy’s eyes that he had his attention.

“What are my other options?”

“I buy it from you outright. You give up any rights to the game or any future developments from your base program,” Peter answered, “The sales agreement will be simpler ... a single-page contract, and you will be paid immediately.”

“How much?”

Peter hesitated and pretended to consider while Alan and Arty looked at him curiously. Finally, he sighed as if he had reached a decision. “Twenty-five.”

The tall black kid nearly hit his head as he sprang off his bed, his eyes wide with disbelief. “Twenty-five THOUSAND dollars?” He gawked down at the company CEO.

Peter nodded. “Payable upfront as soon as you sign a contract with the terms we just discussed,” he replied. “I can have the agreement drafted by tomorrow if you want. You will need to have a parent or legal guardian present to sign with you.”

“This is legit right?” the boy asked suspiciously.

“You have my word,” Peter replied firmly. “If you let us take the disks today, I’ll even give you a thousand cash up front.”

“Hell, motherfuckin’ yeah!” Brian yelled excitedly as he began dancing around his room. Instead of a handshake, he demanded a hand clasp and a fist bump. Everyone was smiling as he yelled for his mom and ejected the floppy from his computer. He added it to the stack of disks in the shoe box and led them out to the kitchen where a rotund, middle-aged black woman stood with her back to the sink and a lit cigarette in her hand. Brian set the box on the table grinning and then pointed at Peter. “Tell her, what you just done told me!”

Peter introduced himself to the large woman and handed her one of his business cards. He reiterated what they discussed in the boy’s room as he pulled out his wallet and counted out ten $100 bills. Both of them watched him intently as he set each bill on the table deliberately in a fan pattern. “I will come by with my financial advisor and a contract, tomorrow afternoon with a check for the remaining $24,000.” he finished.

“See momma?” the tall boy laughed delightedly. “Now I got us enough to pay for all our needs for a good long while.” He hugged her affectionately. She never said a word as she stabbed out her smoke and looked back at him curtly.

“So long as you keep up with your studies and get that scholarship,” she retorted. But her tone was soft as she nodded her head in agreement.

Once handshakes and clasps were exchanged all around, Peter, Alan, and Arty collected the box of disks and departed. They rode back to Peter’s house in his BMW.

“Do you think twenty-five grand might’ve been a little steep?” Alan asked as he sat across from his best friend.

Peter snorted, “Dude, after we get this engine built and start cranking out different genre games using the same model platform — that will seem like pennies,” he remarked as he smiled at the traffic before them. “That shoe box is worth millions, and we just got it for a song.”

Throughout the remainder of March and early April, Peter’s home became a hive of electronic activity. Computers were set up on the dining table for Alan and Arty while Peter worked on his newly upgraded ‘Beast’ at his desk. Kathy flitted around between various musical instruments recording and mixing musical scores that they would use to accent the experience of the game. One moment she would record a jaunty trill on a penny whistle which signaled the early villagers setting out to gather wood; the next she affected an ominous staccato on her Yamaha keyboard when combat occurred.

They drew straws to determine whose turn it was to run out for lunch or dinner and often the Alphas (Kat’s colloquialism for Alan and Arty) would stay the night, allowing them to work late.

Over coffee one morning Peter remarked on Alan’s recent freedom.

“Mom and Dad are off on a cruise too,” he replied as he read through the comic section of the Times.

Peter glanced up from the IBD he had spread on the table. He had to restrict his reading space because the PCs took up most of the table surface. “Since when has your mom ever taken a vacation? I thought she lived at the store.”

The Korean boy nodded. “Yeah, but I guess she got a huge profit-sharing bonus or something,” he remarked offhand. “Costco does it every quarter when they break a certain threshold or something.”

Peter casually flipped through the columns until he found COST and noted their steady upward trajectory. He was holding 11,000 shares of the company in his portfolio currently valued at $45/sh. They were due to announce Q2 earnings within the next two weeks. They had consistently reported at or just above expectations for the last ten quarters. “I’m glad she gets to take a break and enjoy herself,” he replied absently.

Alan snorted, “You and me both, dude. I needed the break more than her.”

They could hear snores coming from the master bedroom above them where Arty had dragged himself to crash only a few hours ago. Kathy was still asleep in their bed. Veronica had long since returned to Pullman where she lived in a dorm on campus. After her freshman year, she was determined to buy a small single-family home near the University to escape all the non-academic drama.

“Speaking of which, I am supposed to fly down to Texas and meet them when they return to port,” the Asian Sensation remarked. “I guess once her vacation is over, she is going to do a scouting run with a couple of other corporate bigwigs, to look at opening a bunch more stores down there. We are going to rent one of those big RVs and tour the state for a couple of weeks before heading to California and back up the coast.”

Peter nodded but said nothing as his subconscious began recognizing and sorting all of the clues. Larger than normal profit shares, consistently increased earnings, expansion goals, and no signals whatever to suggest anything but continued growth. He rose to refill his coffee and stepped into the bedroom to access his E-trade account. After briefly reviewing his holdings, he pulled up the Option chain for Costco and began jotting down notes. Right off the bat, he noticed the September Q4 Calls that were in or close to the money were triple the cost of the closer June Calls. Whereas a JUN 45C was bidding at 9.8 — its September equivalent was 22.5, with huge open interest. He blew out his air in a silent whistle. Something big was going on with the company and there were more bulls here than Barcelona. It was time for another option play and he intended to play it big. But for the moment he closed his portfolio down and shut down the computer to give it a break from all of its recent use. He sat in the dim light staring at nothing as his mind studied the situation from every feasible angle.

“Mmm,” he heard behind him as Kathy stirred beneath the covers. “What is that big beautiful brain of yours stewing over, baby?” she mumbled softly.

“Costco dogs,” he replied as he turned to find her regarding him with her head propped up on her hand.

“Mmm. I love Costco hotdogs,” she murmured, “Makes me hungry. Why don’t you come over here and bring me a Peter dog to snack on?”

E-trade refused to match his nearly $3 million capital outlay, instead offering him a meager $750,000 which he refused on principle. Thus, he was limited in his play to 1000 each of the June 45C, 47.5C, and 50C contracts, which cost him $2.5 million. It happened that his move in and of itself prompted a bidding war and left him nearly half a million wealthier by the end of the day. But he was far too disciplined to react to random market fluctuations. He set his targeted Stop Loss orders and sat back to wonder what would happen to the company shortly. He wouldn’t find out for another two weeks.

They were set to depart Seattle on Monday, April 8^th, aboard the Nordic Prince, and the Royal Caribbean Cruise Lines provided them with a royalty-class penthouse suite where they lived and traveled in absolute luxury for the duration of their trip. During their absence, Cousin Eddy was contracted to tear out the carport and build an attached one-car garage. Pallets of building materials and lumber had already been delivered and were staged around the front yard, as they spent their last week before the cruise, working feverishly to get ‘Village Sim-sation’ prepared for release. Peter provided Jason Abernathy with an ultra-condensed sample of the game as well as several demo sequences, and the response from ORCA was rabid, to say the least. They were prepared to negotiate terms immediately and avoid the chance of missing out on the opportunity to license a sure hit.

Peter hedged by assuring them they would have the opportunity to bid on it shortly after they returned from their much-needed vacation. Then he shut off his cell phone and tried to set aside all thoughts of investing and game development for the next two weeks. Fortunately, he had the prettiest girl on the planet to keep him distracted. They decided to spend the weekend before the cruise, in Seattle and booked a room with the historic Renaissance Hotel downtown. Aside from a purely posh stay, the Hotel offered to keep Kathy’s ‘baby’ in their secure underground parking lot for the duration of their trip. They enjoyed playing tourist in their own backyard and followed several tour groups as they went around checking out touristy attractions exclusive to the iconic city. After solemnly paying their respects to both Jimi Hendrix and Bruce Lee, they had an early dinner atop the Space Needle. The next day was excessively rainy so they limited their excursions to the waterfront and indoor Pike Place Market. With large Starbucks lattes in hand, they ended their final night in the emerald city by catching a cab back to their hotel.

Traveling aboard the Nordic Prince was both fun and taxing for Peter. Both of them marveled at the modern ingenuity and outrageous lengths the Cruise line would go to offer the very best experience for its customers. The food and entertainment venues were first class and they enjoyed themselves immensely as they took it all in. The one problem that Peter noticed almost immediately was his inability to sleep. It was of little consequence the first night because they spent most of the evening making love and cuddling. The next evening found him lying awake as well though, while Kathy slept soundly beside him. He couldn’t even attribute his insomnia to any pressing matters in his mind. No unsettling memories or unresolved issues haunted his thoughts as he lay on his back gazing at the ceiling. The next day he was exhausted and resolved to take a nap after lunch. They were slowly steaming along the inside passage toward their next stop at Ketchikan. Despite his exhausted state, he could not fall asleep for even a brief period. By the third morning, he was so emotionally and physically drained that Kathy made him check in with the ship’s doctor who prescribed him a powerful barbiturate.

Returning to his room he took the pill skeptically and washed it down with a glass of orange juice. Kathy sat with him munching on croissants and fruit slices until he started nodding off. “Don’t mish out on shtuff if I’m shleeping,” he drooled as she tucked him in and kissed his eyes closed. “Jush go without...” he began snoring within fifteen minutes of taking the pill.

“Sleep well, my beautiful prince,” she said softly as she gazed adoringly into his sleeping face. She leaned over him one more time to kiss his mouth. “I love you.”

He woke up thirty hours later and raced for the bathroom before his bladder popped. He grumbled tiredly about missing their first Port of call in the largest State.

“Don’t worry about it, baby,” Kathy assured him as he came back out, furiously scrubbing the layer of gunk from his teeth. “It rained. Hard.”

“Still,” he grumbled. “I hope I’m over whatever it was keeping me awake.”

“We will be in Skagway shortly, and we get to spend the whole day there,” she replied. “I booked us on a gold rush tour and a saltwater fly-fishing trip.” She slipped on her flip-flops while he changed his clothes for dinner. He caught her scratching her back awkwardly and inquired about it. “Mosquitoes,” she muttered as they left their cabin. “Those fuckers are huge and they bite hard!”

“I guess you will have to start wearing clothes out then,” he smirked.

Over dinner, she presented him with a gift. He had just raided the buffet for the third time. He held up the small wrapped box curiously. It was about the size of a jewelry box. “What is it?” he asked shaking it to see if there were any auditory clues. It seemed excessively heavy for its size.

“Open it,” she replied as she tucked into her dessert. “I bought it in Ketchikan when I went out with Bill and Shirley next door.” They were an elderly couple who pretty much spent their retirement going from one cruise to another.

He quickly tore off the paper and opened the velvet-hinged box to reveal a solid gold nugget the size of a peanut. His eyes grew wide and he whistled appreciatively. “Holy crap! Babe this is huge!” He took it out and hefted it in his hand.

“Two and a half ounces,” she replied. “They had bigger ones on display but wouldn’t sell me one.”

He marveled at the shiny lump of metal as he turned it about in the subtle lighting. Then an odd thing happened. Kathy watched as the familiar distant look appeared on his face. She called it the ‘ghost gaze’ because he associated the episodes with ‘memories’ from a former time that just suddenly popped to the surface of his subconsciousness. She patiently waited as he stared off into nothing for many seconds before shaking it off and blinking.

“What did the ghost remember this time?” she asked.

He blinked again and set the nugget back in its box. “I’m not sure,” he said quietly. “Something about gold or the value of it in the future. Something I need to look into and familiarize myself with so that I can be ready to capitalize on it when the time is right.”

“Hmph, that’s it? No bad omens, deep insights, winning lottery numbers...” she teased lightly. She was one of only a handful of people who knew and recognized the odd phenomenon about her boyfriend.

He reached across and helped himself to a spoonful of the ice cream sundae she had created. “Well, it also reminded me to tell you how beautiful and sweet you are and how fucking lucky I am to have you beside me — among other things.”

“Oh, it did, huh?” she replied gazing into his eyes as she slowly licked her spoon clean. “What ‘other’ things?”

“Nothing too important,” he mused as he returned to his own plate full of food. “Just little things like how I might have other needs besides food and sleep, which might have been neglected over the last day or so...”

She opened her mouth and scoffed at him with humorous disbelief. “Oh, ‘your’ needs huh?” she retorted. “Nothing about any of my needs that might have similarly gone without.”

“Yeah,” he replied despondently, shaking his head in mock sorrow. “So much neglect to make up for.”

“Well, bucko,” she stated as she wiped her mouth. “Perhaps if we go and take care of ‘your’ needs, I might satisfy some of my own.”

He nodded logically. “A means to an end.”

For two weeks they enjoyed the slow journey up the inside passage through Southeast Alaska and across the gulf to Anchorage before turning around and making the return journey, stopping at different ports along the way. By the time they stopped in Victoria, B.C. for the night, they were both ready to be off the boat and back home. The following afternoon they disembarked back in Seattle and eagerly drove back home to find a brand-new garage waiting for them to park in. After unpacking and settling back in, Peter took a while to scan through two weeks of the Business Daily. He learned the answer to his burning question about what was up with Costco, in the very last issue dated that morning, April 19^th.

Costco beats Q2 estimates by a wide margin and announces 2:1 split.

He read through the article twice before going to his computer and logging onto his E-trade account. Trading was already closed for the day but he was still holding on to all of his contracts. Effective May 16^th he would have 2000 JUN 22.5 Calls, 2000 23.75 Calls, and 2000 25 Calls — all of which were well in the money already. His common stock would also double to 22,000 shares. COST had gapped up by $2 in after-market trading.

“Good news baby?”

He blinked and turned to find Kathy leaning against the door jamb regarding him curiously.

“Pardon?”

“I can tell by the glint in your eyes when you are particularly happy about something,” she answered as she sauntered over to sit in his lap. She recognized his portfolio on the monitor but only gave it a passing glance. “Are we still rich?”

He wrapped his arms around her possessively and kissed her bare shoulder. “And then some, babe.”

Later he went to the kitchen and enjoyed preparing a simple dinner consisting of lasagna and salads, while his beloved sat at the kitchen table going through all of the mail that Cousin Eddy had collected for them. She read aloud a card they received from Allister and Monty. She tried to capture their British accents as they thanked the two of them profusely for the ‘marvelous’ and ‘bloody brilliant’ gold nuggets that Peter bought and had shipped to them at their residence in ‘Faversham nearer to Canterbury’. He laughed delightedly at her speech as he layered the noodles in a casserole dish.