Ann: Appendix 2A, page-4

Convertible notes are like a loan from an investor to the company. They get a set interest rate on the loan, to be paid back with interest after a set period of time, say two years. Or they can convert the loan into shares at any time during the two years. So if the share price goes up a lot they can choose to convert (their cost base was 30c per share, in this case) and then sell the shares on market, or keep them, whatever they want to do with them.

This convertible note seems a bit different to normal because there is no interest rate specified.