There is a discount to the market price which, unless I am, misunderstanding you , you are not factoring into your calculation. People issue convertibles normally to convert into free-trading discounted shares, your post clearly indicates the % discount to market price. so if discount 50% , and if market price is $.02, the note is converted to shares at price of $.01.
Second, why would you exclude the unamortized discount from face value of note to be converted ? i.e. if note is for $100,000 that is what can be converted. if they book net of the unamortized discount at say $40,000, I really do not understand why you wouldn't calculate shares at the face value. ( Note I do not include interests accruals in my calculation).
I am not CPA but the above seems clear from what you posted .Please let me know if I am incorrect.