Fair question, when ECIG acquired the companies they assigned a value. The notes were to convert at a certain value based upon ECIG valuations.
The convertible notes have a convert date. The PPS was much higher when the deal was made. So you use a multiple day trading average at the conversion (VWRAP).
Because of the low PPS, the note holder can convert more shares based on a debt. The note holders received cash, stock and convertible notes for a business sold. Those gains are taxable.
Read the SEC filings. You will understand much better. Assets far exceed liabilities.
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