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The $235,000 in line-of-credit funds could keep MCM going
only for a few months, since, in early 1974, the company was
spending an average of $60,000 a month. To start the volume
production of the MCM /70, which was now projected to begin
in mid-1974, the company needed more cash. A new agreement
between Kutt and the same group of guarantors, reached in
March 1974, called for an increase of the bank line of credit by
an additional $180,000. These extended loan guarantees, how-
ever, would not come cost-free to Kutt, as he was asked to make
further concessions. This time, he was to forgo his monthly
salary of $3,000, effective 1 April 1974, until the production of
the MCM /70 began. The foregone salary was to be regarded as
a loan to MCM and was to be repaid by the company as soon
as MCM was in a financial position to do so and only after the
guaranteed bank loan was repaid. “In consideration of making
such loans,” wrote Robertson in his 14 March 1974 letter to
Kutt, “you shall be entitled to receive, commencing with the
initial utilization of the credit … shares of the company on the
same basis as granted to the guarantors of such increased line
of credit.”
Robertson's letter to Kutt explicitly stated that the additional
loan could only be used to pay for purchase of inventory needed
to start the production of the MCM /70. Furthermore, before
MCM could draw funds from this additional loan, W. Thomp-
son (an MCM director) would have to provide the board of dir-
ectors with the results of the testing of an MCM /70 carried out
by his company.
The spirit of the new agreement indicated the outside share-
holders' concern with the Company's ability to move quickly
into production. The general market conditions were bad. Since
1973, the stock market had been going through what was his-
torically one of its most severe and prolonged declines; before
everything was over, technology stocks would plummet more
than 60 per cent. In that climate, so unfavourable for invest-
ors, the guarantors wanted Kutt to share more financial respon-
 
 
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