ELF - This can't be right??, page-7

Where is it written that you can walk away from the ELF contract after three years if the shares fall below the value of the loan?

Here’s how I believe it might work, all imo:

The company says, ‘The ‘secured shares’ are those shares created through the exercise of options which are funded under the ELF program.’

Where will the company get the capital to pay for the conversions? My guess is that there’s a wholesaler prepared to pay for conversion on the guarantee that the company can repay that loan. If so, then the loans from the ELF may provide the ‘collateral’ (in the form of current assets) for the wholesale lender.

So why should it matter to the company if the capitalised interest loans are paid back in three years from now? It won’t matter. Those unrealised assets, especially the high interest ones, will have tremendous value for the company in terms of borrowing.

So, given this scenario, capitalised or not, in three years or sooner, regardless of where the share price is, you will have to pay back your personal loan that is on their books under current assets IN FULL, because they will want to liquefy those assets to pay their creditors.

This is why I think it is critical to seek financial and legal advice before signing anything. Also, ask some ‘what if’ questions like what if it all goes belly up, will you still have to pay back the loan and to whom?

As usual, we only have snippets to go on. Hopefully, the company will release full details soon.

Best of luck.