Can you link the filing and point to the page, MD&A is my guess. However, for now, the issuer is right, and you are as well, just misinterpretation. The conversion features are floating versus fair market value. It adjust all three, even though as you state a soft hit, i.e. non-cash.
I wish I could point you to Wiley's long winded section on derivatives. Maybe I can find it for you on line.
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