Continuing my research, here's some more information on FASB Accounting Rules governing reporting of Derivative Assets and Liabilities that are associated with Convertible Debentures.
The following sections from the FASB Accounting Rules on Convertible Debt paper tells us everything we need to know about why the company had to show the ~$5 million in Derivatives Liability... and how that $5 million figure can be reduced and extinguished over time.
More importantly, the paper makes it clear the accounting of fair value interest expense for Convertible Debentures does not in of itself change the material value of the company, or its share price, or its borrowing costs.
Here's the bottom line: the FASB rules on accounting for Convertible Debt Instruments forces a "Fair Price" basis of the convertible shares as interest payments they would incur if they didn't have the Convertible Shares Option, artificially inflating expenses on the company's Balance Sheet.
In other words, the Derivatives Liability does not represent an actual cash expense for the company; but, rather, it forces the company to display a "non-cash" Interest Expense depicting the amount of interest liability they would have incurred under other types of financing options. As a result, the FSB requirement to show this interest expense reduces the company's earnings per share on their Balance Sheet.
This accounting requirement does not imply the company cannot obtain favorable terms and interest payments on future borrowing. That is something investors and funders need to decide for themselves, based on the strengths and weaknesses of the company's business model, revenues and costs.