The money goes for new product development, product enhancement, advertising, building distribution channels, etc.
If you have to ask where money is spent building up a business and creating breakthroughs in technology, may I recommend you read "Business for Dummies". So sad that you didn't know that
Dang, you're right... all businesses are supposed to be built for free, with no expenses. Oh, and ALL should be successful in the very short-term. They never need time to develop and they never make mistakes or incur costs as they develop.
That's how all businesses are. Especially penny stocks.