08 TogetherChapter 117
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Daze In The ValleyChapter 117 free porn video
Sean convened the Sunday meeting with much difficulty. There was a general hum of anticipation as everyone – except Adam – wondered what decision would be hammered out regarding dividends.
Celina and Mike were there, but were sitting separately from the board members. Erin, Trinity and Karlie were also sitting along the wall. They had no vote in the matter – although they were sure the group would listen to their ideas, if they had any.
The routine business seemed to take forever. There were updates on all the projects still running: a bid for the neighboring lot was formally approved; Walt discussed what he had accomplished on his mechanization project and discussed ideas Timm had proffered; Mary talked about the new web sites and the number of hits and members; Shelly went over the movie project; Sarah filled everyone in on Five Friends Casting and the proposed expansion, including the offer to represent Molly Caudill and Lia Pepper; Rachelle spoke of the new marketing opportunities associated with the new projects; Allie gave a brief overview of expenditures and income of the previous week.
Sean studiously ignored Adam. He had no information to impart to the group. With a sigh, Sean asked for new business.
"Show me the money!" Mary said. "Sorry, what I meant to say was I propose we discuss dividends from the recent sale of a patent to PlayCo."
"Seconded," Allie said. She had been watching Adam sit quietly. Like everyone else, he had a legal pad in front of him. Unlike anyone else, he also had a box beside his chair. Allie noticed that Sean wouldn't even look in Adam's direction. She wondered what was going on.
"Discussion?" Sean asked. He was surprised when Adam didn't ask to be recognized. Instead, Adam sat and waited for someone else to take the lead.
"I propose we declare dividends on 50 percent of the income from PlayCo and split it according to the percentage of shares each owns," Rachelle offered.
The group started doing math in its head.
"I disagree," Adam said simply. The softness of his voice caused everyone to strain to hear what he'd said. One by one, they turned to him. "Mr. Chairman, may I have the floor?"
Sean considered telling him no, but he knew it wouldn't work. The group would solicit Adam's opinion out of session if he stopped him now. Sean wasn't positive why he felt he had to save Adam from himself. Like everyone, Sean had spent part of the money in his head. But it was all in theory. He had more than he ever expected. Still, he knew that Adam would be in for a ration of shit for his proposal.
"Go ahead," Sean said with resignation.
Adam stood and took a look at the assembled group. He hadn't discussed this idea even with those closest to him. He had heard snippets of conversation from everyone about what they planned to do with their share of the money.
"I propose we declare zero percent of our income as dividend as this point," Adam said. Sean looked at the table but everyone else's eyes bore into Adam. He picked up a sheaf of papers and distributed them. "Right now declaring dividends would leave us with an undue tax burden – as a business and as individuals. As of close of business Friday, Subarctic Enterprises had $742,883,267 and some change in its corporate account. If we declare dividends today – of any percent – we can expect to lose one-half of the distributed money in taxes. Additionally, even a slight percentage of this money will send everyone in this room – with the exception of Celina and Mike, who are already there – into the 50 percent tax bracket. If we declare dividends of 50 percent – $375 million will become $100 million pretty quickly. So if you were expecting to pocket $40 million, it will be more like $10 million by the time the government is done. Not exactly a drop in the ocean, but far less than it could be."
The individuals in the group looked at the papers Adam had distributed. It quoted relevant statutes and gave them a breakdown of the taxes required for several different percentages.
"We need to make a decision today," Adam continued, "but it is only nominally related to dividends. The main question is if we are in this for the long-term or the short-term. If we choose the first, it would be stupid to distribute money. If we choose the second, we might as well distribute it all."
Several voices started to speak but Adam simply spoke over them.
"We need to do research on this subject," he said. "Have we consulted with a money manager? Not as a group. Have we stopped to consider the ramification of what this would mean? Not as a group. Those are important questions. But the main question I want everyone to ask themselves is this: Do any of us really need that much money right now?"
He didn't wait for the answer.
"I spent four hours Friday with a tax adviser," he said. "Over the past three weeks, I have consulted several business managers of major corporations and small companies. Folks, let this sink in for a minute. We are a billion-dollar business. We are not a Mom-and-Pop store that is expected to make $25,000 this year. I don't mean to be provocative, but we are a bigger corporation than Cunningham Motors. That is, we have more assets and lower overhead than Mike's company. If we want to see this business succeed past this summer, we need to understand that fact. If we have done as much as we wanted, then I propose we close the business and split the proceeds. I ask that you table the dividends motion long enough for me to transfer my share of ownership to Mary, however."
No one at the table said anything as they considered Adam's words. It was left to those on the outer edges to speak.
"Do you have a proposal?" Trinity asked. She had been aware of some of the issues the papers raised before – although she didn't properly related the significance of them.
"I do," Adam said, "depending upon the answer to the question I just posed. Do we wish to continue Subarctic Enterprises?"
"Of course we do," Rachelle said.
Adam tilted his head in a questioning manner.
"I think we should hear your proposal," Sarah said.
Adam nodded.
"First off, we have to limit our tax liability," he said. "I understand the need for taxes, but it seems ridiculous for us to pay 70 percent to federal, state and local entities. There are several ways to get around that. We get tax breaks for charitable donations. I mean federally recognized groups, not the 'Allie Needs a Porsche Fund' or the 'Help Walt Buy More Tools Campaign.' Mike, do you know how you limit your liability?"
Mike shrugged.
"I don't really deal with that," he said. He was surprised when Adam smiled.
"I suspected that you were less of a micro-manager than that," he said, "so I spoke to your business manager and your accountant. He didn't seem to think you'd mind and I hope you don't. I just needed a place to start and, well, when I think of how a business should be run, you're it. You donate 38 cents of every dollar in profit to various organizations."
"Really?" Mike asked. "How do I make money? I mean, I know I make money but that seems like an awful lot considering my tax bill – and thank you for the compliment. I'm not upset."
"Those donations absolve you of several cumbersome taxes dollar-for-dollar and sometimes in a larger ratio," he said. "Instead of passing the money to Sacramento or Washington, D.C., you offer it to charitable groups. But we're not locked into following your footsteps. In fact, I don't think we should. First off, I am opposed to offering money to groups who spend more on administrative costs than they provide in aid. That pretty much sums up all American and international charities. It works for you, but we have options. We also receive tax breaks for any tangible benefit we provide to our employees and owners."
"Tangible benefits?" Shelly asked. "Can you expound?"
"I can," Adam said with a wink. "A tangible benefit can be what most people think: health and life insurance, short- and long-term disability payments, matching-fund retirement plans, profit sharing. There are others but those are the ones we can realistically do at this point."
"We're working toward those," Sean pointed out. Adam nodded again.
"Then there is the best way I can find to cut our burden: a self-perpetuating educational trust," he said. "This is one where we would see a direct benefit ourselves and lower our burden at the same time. Celina, would you explain this? And before you get pissed at me for going behind your backs and discussing this with her, take a step backward. I tried to bring this up in general conversation and was shut down completely. You all went off into the fantasy land of crown jewels and jet-setting without thinking of the real world. I care about each of you too much to let you see 60 or 70 percent of this money be given away for the benefit of no one."
Celina stood and took a step to the center of the room.
"I admit I am not an accountant but I do know the business code, and what I wasn't certain about I discussed with other attorneys," she said. She had seen the harsh look that crossed certain faces, just as Adam had, but she didn't care. It was her job to protect this group and she would have made the same proposal as Adam had – if she had been asked for her opinion, which only Adam had. "A self-perpetuating educational trust is just what it sounds like. You will need to set criteria and it must be available to all current and future employees so long as the trust is solvent. You place a set amount of money aside in an interest-bearing account. To qualify for the highest rate of tax alleviation, you must maintain the trust for 10 years and if you dissolve the trust before then, you will be responsible for all taxes due on the initial investment and on any interest you've accumulated."
"How can it be spent?" Shelly wondered. Celina turned and gestured toward Adam with a grin.
"It can be used to offset legitimate educational expenses for ownership, employees, subsidiary employees, contracted employees and their families," Adam explained. "A set of criteria must be written and they must be followed. For example, a person must complete at least 24 hours of classes in a calendar year and maintain a 2.5 GPA. He or she must work for Subarctic Enterprises or its subsidiaries for at least 25 hours per week. Et cetera, et cetera, et cetera. I have some examples we can look at if we choose to do this. The best part – for almost everyone in this room – is that it can be applied to outstanding education debt as well. We can't use it to pay ourselves back for what we spent in rent or food for the past two years. But an amount identical to what each of you has in loans can be awarded – so long as we have someone who verifies and certifies the money was used to absolve those debts. I have been advised that we wait for at least a year after you finish your educations, or six months after the loans come due, before we take this step. I can explain later but for now I have more. Folks, I hate that it has come to this. But it has."
He stopped and looked at each face before continuing.
"If we wish to continue this corporation, it's time for us to accept we don't know everything and to bring in people who do," Adam continued. "It's time for us to hire a business manager and create an accounting department. It's time for us to bring in a human resources director. It's time we started to hire employees to help Walt and to help Mary and to help Rachelle. You saw how the three days that we had classes this week went. We all had to scramble to get things done or stay up until three or four in the morning. That can't continue. What happens in August when we have five or six classes? We need those people just to continue what we already have in the works. If we plan to grow Subarctic and expand into other areas, we're going to need more employees. In order to hire those employees, we need capital. Are we ready to accept that this has grown too fast for any of us to keep up with?"
"I could use help," Walt admitted. "I mean, not a permanent position, I don't think. But I could use a good mechanic to help me with things. Right now, everyone has helped me out when I asked, but there are times I need someone when no one is around. Timm would be perfect."
"Same here," Mary added. "I can't be expected to watch those servers 24 hours a day, 365 days a year. The same as we can't expect Sarah to answer any question about Five Friends Casting every minute of every day. Sean, in two or three years, you'll be ready to handle the accounting end of things. But you're the first to admit that you don't know all the concepts and corporate laws. We need to bring in someone from the outside or contract with an outside person to deal with some of this. We also need to bring in people to assist in our projects."
"We're off-track," Sean insisted.
"Not really," Adam said. He didn't want to butt heads with Sean, but it was necessary. "We're still discussing dividends. I have a proposal. In lieu of dividends, we award a salary commensurate to the level of ownership. I was thinking, generically, of $500 per month for each percentage point of ownership for anyone who holds 10 percent or more. For those owning less than 10 percent, $1000 per month per point. The officers would be paid an additional $250 per month per point."
He held up his hand to forestall the questions.
"We declare no profit until it is legally necessary and we work to offset that profit as much as we can," he said. "We are going to have to pay at least a quarter of what we have now, perhaps more. There is no avoiding that. I expect we'll have about $500 million by the time it all washes out. My proposal is that we move $50 million into our working capital account. We take $100 million and put it into an interest-bearing account to offset our salaries. We take another $50 million and put it into an educational trust. The remaining $300 million is to be used for long-term investment and long-term capital improvements.
"Until Walt is done, we don't have any depreciable assets except for the server farm. We can claim interest on this house against our taxes and a percentage of the lease of the SUV. But folks, we're making a ton of money right now. The 2 percent we're charging on credit card transactions is going to mean $65,000 a year in profits, not to mention hosting fees. The 5 percent we're taking for Five Friends is going to mean about the same over the course of a year – even after we pay Veronica's salary and benefits. The rental of Walt's products will produce, in my estimation, about $200,000 next year. The profits from our feature side will be close to a million if we do three per year and they perform to the expectations Ben has put forth. Jerry suggests Ben's numbers are conservative and I expect we'll get to the point where we're doing four or five per year."
"That means even without this money from PlayCo, at this time next year, with just what we're doing right now, we'd have had close to $1.5 million in assets. Our debts during that time will be minimal. None of our projects require a huge amount of investment capital. None of us will need a huge amount of money if our education expenses are paid. If we need a lump sum, part of it can come from what the corporation owes us for three months of unpaid labor. We need to think long-term, and here and now is the time for us to start looking at things from that perspective. The prospectus in front of you details everything I've told you more specifically."
The group looked down at the 26-page document in front of them.
"Incidentally, that was paid for out of pocket," Adam said as a joke, "as were the consulting fees for an outside accountant to go over our structure and make suggestions. His report isn't copied yet because I just picked it up Friday afternoon and I've been a little tied up with other things. I'll make copies Monday and distribute them in time for our next meeting."
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