It's clearly stated the assets are now fully collateralized by 700K in financing notes. This is a form of debtor in possession financing.
The stock conversion is optional and negotiable. By my calculations there are now over 300m shares outstanding and growing.
Audited financials show losses of $10 for every dollar in revenue. Unaudited talk claim now that losses have been cut to $1.25 per $1 in revenue. That is not possible ramping up inventory and distribution IMO.