say you had a million options at $1 strike price you would need...

say you had a million options at $1 strike price you would need a million dollars to convert
if the share price was at $2 you would be looking at 2 million (1 million profit before expenses) however you still need the million to convert so the company may let you convert half a million for FREE reducing the overall dilution while also alleviating the inevitable selling pressure that would come with you trying to sell to pay of your million dollar loan to convert your shares

So no the company doesn't get any money though you end up with less shares, I wouldn't be happy with this at all atm but once we get sufficiently cash flow positive would be more than happy for them to treat themselves