A.) The conversion price was set in the agreement with the debenture folks well in advance of this June 30 date.
B.) The choice to convert appears to be that of the debenture holders.
C.) From the Q, the shareholders have approved 400MM shares. 202.6MM were issued (as of the Q). And ~183MM were outstanding.
D.) The difference between the issued and outstanding were held on the balance sheet at $0.001 par value. Which appears to be a standard accounting practice.
E.) "The debt is secured pursuant to a Stock Pledge Agreement, to which Stephen Squires, the Company’s Chief Executive Officer, has pledged 20,000,000 shares of stock personally held, until such time as the Debentures are paid in their entirety." We really don't know if this refers to additional shares set aside in SS' personal account.
F.) So... back to your original question regarding dilution. Yes, to a degree. Clearly the differential between the issued and the outstanding (19.7) doesn't equal the sum of these conversions (26.9) therefore additional shares from the 400MM approved were probably issued and made outstanding.
G.) Additionally, the company uses shares as cash to pay the bills. It is likely they needed to issue more shares to pay Accounts Payables and employee salaries, e.g., Dr. James Puthussery, during the quarter, even if modest revenue was generated.
H.) These supplier's shares, when coming off their restrictions, are also likely to be a sizable percentage of the shares sold daily on the public OTC.
