They are either buying more product, promotion somewhere for an event and other things that have come up. They have not specified as to where the money is going towards but you will see it on the next Q, they do not pay debt off with money here, they just convert debt to shares and always have.
So why lend? Simple it is a 10% rake for only a 4 month borrow, tell me where you can get a rate of return like that right now? They also get a 30% discount on share issuance, so even if this went to .0001, they get shares issued to them at .00007 and can sell all day long at .0001 for profit. Much like traders who play bottom bounces there are financial providers looking at the very same thing.
No matter what happens to the company they typically get their money first.
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