When they convert the note, they will get proceeds. That will be reinvested as working capital. How can you say only a portion of the proceeds? Where does it say that?
They cant even sell those shares without an sec filing and then they are limited to selling a tiny percentage of what they owns and only every 6 months. Do your homework check with the SEC. Most imortantly if they did sell the shares, the company will receive the profits, as noted in the GOVERMENT SEC 8-k.