"How does company convert so many shares to 31 Group?"
Do you know this for a fact and if so what is your info source a bit more background info please.
http://hydrophi.com/investors/sec-filings/ 2014-07-29 8-K – Current report "which limit may be increased to 9.99% at the election of the Investor but no greater than 9.99%."
I'm not sure if this is the answer you're looking for. Didn't check whether 31 Group has more notes outstanding.