it means HYSR executes a promissory note in favor of somebody in the amount of X number of dollars. HYSR and the noteholder agree to convert the amount outstanding under the note into shares of HYSR common stock.
it basically means you are diluting the company for cash....because you are creating more common stock and usually a very cheap prices (especially this type of legacy notes in startup companies). So basically current shareholders own less % of the company because shares outstanding increases (making each share less valuable).
they have been doing this for a long time already.
i don't know everything but this is pretty much how it works i believe. Somebody else may want to comment or correct something.
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