IIts not completely useless to try and figure out what happened,...

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Its not completely useless to try and figure out what happened, often the simplest explanation isn't far from the mark.
I think what makes sense is that management believed they could get EBIT positive before running out of cash. With some form of profitability they would have got a much better deal and from a larger SP. That would show at least that they believe what they profess about the company's prospects. The downside is that it would also mean that their confidence wasn't in line with reality and that can be (and in this case was) costly.

What do you think might have been going on? Whats the best and worst possible explanations for the blunder?

If they had raised a year ago when the SP was still around 15c they might have managed it at 11c. The sensible thing to do then would have been to pay down the debt as much as possible, beyond what was required for WC. That would have kept the creditor and other potential investors happy.