ELF - This can't be right??

Hi all

A few questions that I can't figure out are bugging me about the ELF

1. Am I missing something? What's the company's incentive to offer financing for the options? I understand it could be for generating cash from interest, but if there's an option to capitalise the interest, this doesn't quite make sense then?

2. Also, it seems odd to me that we could walk away after 3 years if the shares fall below the value of the loan (including capitalised interest). If this is the case, why wouldn't everyone buy a hell of a lot of B's @ 0.1 or 0.2 cents, enter the ELF with capitalised interest. It's virtually risk free, other than the initial (relatively small) purchase price. And based on the interest rates and my calculations, if the heads get up to around 2.0 cents then the loan on OB's would be fully satisfied (including interest).

3. That brings up another question, what if in 3 years say the ELF expires, the shares are worth say 3 cents, but you didn't have funding to pay off the ELF debt. I ask because I know the heads under the ELF cannot be traded while the debt is still unpaid. Wouldn't it be great if they could be traded if the proceeds are used to repay the loan (including capitalised interest) first?

4. If the company seizes the heads to repay the loan does it keep profits? or does the profit go back to the shareholder?

Thanks