The situation is the opposite. The Series C "gift" shares represent a current liability of $4 million, which reduces shareholder equity on the balance sheet by the same amount.
Rather than reducing debt, the "gift distribution" is an additional debt to be paid in cash or new common shares. If the 20 million Series C shares with a face value of $.20 end up being converted to common shares at market price, the dilution will be massive. At the current share price of $.0001, they would be convertible into 200,000,000,000 (200 billion) common shares.